The Radar Logic series of housing prices (nsa) is up 3.7% in the year ending July, and it is essentially unchanged for the past three years. The Case Shiller measure of housing prices (sa) is up 1.1% over the past year, and hasn't changed much either over the past several years. That's three years of almost flat prices, with the important change on the margin being to strengthen, albeit modestly. For over six years the housing market has been adjusting, painfully, to new realities, and increasingly it appears that the adjustment process is complete. Prices have found a new equilibrium.
Using the Case Shiller data for 10 large metropolitan areas, and comparing that to the BLS' calculation of owner's equivalent rent, we get the same story: housing prices and rents have come back into alignment; the adjustment process is largely complete.
However, the current level of prices may not be a true equilibrium, because mortgage rates, which determine the "cost" of a house for many people, are extraordinarily low. If getting a mortgage were to be made somewhat easier (it's still difficult, as my daughter can attest), demand for housing could increase significantly, boosting prices even as banks increased their sales of foreclosed properties. Even now there are bidding wars in some markets, and some houses in my daughter's neighborhood are selling for full price just one or two days after listing.