Many of the cities in the index that saw a drop in housing prices also have high unemployment rates. Home prices in Las Vegas, which has been hit especially hard during the housing crisis, dropped 5.3 percent from the previous year, according to the Case-Shiller Index. The unemployment rate there is 13.3 percent.
The national unemployment rate was 9 percent in April, according to the Bureau of Labor Statistics.
Housing data is an important indicator of the health of the economy in part because homes are often the most important assets of most households, Martin said.
"Home prices have just collapsed, so peoples' net worth is in awful shape at the moment. It will take a lot to improve their balance sheets through saving and income growth," Martin said.
Personal incomes rose 0.4 percent in March while personal consumption rose by 0.4 percent, leaving the personal savings rate unchanged at 4.9 percent.
"But with the high unemployment, American consumers are not in a great shape at all, and the increase in gas prices have not really helped them," Martin said.