I think this bit of insight from economist Mike Darda of MKM Partners sums things up nicely:
The current credit crisis began after a rise in housing inventories weakened home prices and sent credit markets into a tailspin. It would seem only logical then to expect inventories to turn before house price trends become more favorable. Our model suggests new home inventories will have to fall below 7 months supply (from 10 months currently) before home prices begin to rise again. Unfortunately, this could take longer than anticipated given the current state of credit markets.... We believe improvement in corporate bond and mortgage markets is a crucial prerequisite to breaking the negative feedback loop between housing, the financial system, and the broad economy.