According to an 88 page report from the Office of Federal Housing Enterprise Oversight (OFHEO), 65% of the 291 cities they monitor had "...positive four-quarter appreciation" in 2007...". This report is titled "Widespread House Declines in Fourth Quarter," but in reading the report, there is good news for some areas of the country. (see page 2, #6)
There are of course some areas of the country that are not appreciating. Statistics can be used to make any point you want. This report uses a few different set of statistics to show different aspects of the housing market. Each set of stats provides a different opinion.
US real estate still provides one of the best available forms of investment for people looking to grow wealth over the long run.
The report can be found at: http://www.ofheo.gov/media/pdf/4q07hpi.pdf