Global Insight and National City Group have released their latest piece of research on the national housing market. Some key snippets follow:

House prices declined during the fourth quarter of 2007 for the second consecutive period. The decline was at a precipitous 5.1 percent annualized rate. Prices are now down 0.3 percent from one-year ago and 1.7 percent from the peak level, during the second quarter of 2007.

Price declines were pervasive, afflicting 291 of 330 metro areas. These 291 metro areas represent the overwhelming majority of the U.S. housing market. California, Michigan and Florida continue to account for the most severe losses. 

That's not good. Is there any silver lining? Actually yes!

Overvaluation is declining sharply. Twenty-one metro areas are judged to be overvalued during the fourth quarter of 2007, down from a peak of 58 metro areas in 2006. The decline of overvaluation is even greater when measured as a share of total housing units (4 percent) and total real estate value (7 percent).

That means that housing prices are getting back in line with income levels. Here is another way of looking at it.

Another way of measuring the degree of overvaluation is by the share of the total housing market meeting the criterion of overvalued. For example, at its peak in the second quarter of 2006,20 percent of all housing units in America were in metro areas classified as overvalued. By the fourth quarter of 2007, however, that figure dropped to a modest 4 percent…Essentially we have, in a scant six quarters, reversed the overvaluation generated since the last half of 2004.