U.S. home prices fell by 4.1 percent during 2010, with a somewhat smaller decline predicted for the current year, according to new figures from Clear Capital market research.

Last year was a turbulent one for home prices, which shot up 9.7 percent during one 21-week span from March through August, only to fall just as fast from September through December, dropping 9.4 percent over 19 weeks, according to Clear Capital figures. The company predicts prices will continue to decline in 2011, with a 3.7 percent drop forecast for the year ahead.

"In terms of home prices, this past year has certainly been characterized by uncertainty," said Dr. Alex Villacorta, senior statistician for Clear Capital. "Tax incentives and high levels of distressed sale activity had counter effects on home prices which contributed to the fragility of the markets."

He said that while housing markets in some metro areas are well on their way to recovery, others are experiencing renewed downturns reminiscent of the original crash two years ago. The key difference between the two is local unemployment rates and distressed housing stocks, he said.

"Even though many major markets are forecasted to be down again in 2011, definite signs of overall stabilization are evident," the report read. "Nationally, nearly half of the yearly declines are expected in the first quarter of the year, leaving unchanged price growth during the middle of the year, and renewed declines in the last quarter of the year."

California markets expected to cool off

Despite the chaotic nature of the past year, things did settle down compared to 2009. Only eight of the 50 major metropolitan areas tracked showed double-digit price declines for the year, while 15 experienced price gains, six of them in California.

Those California gains are expected to be short-lived, however, with 2011 price declines predicted for the entire western third of the U.S. San Francisco is expected to see a nearly 10 percent price decline, following a 0.9 percent gain in 2009, while prices in San Jose are expected to drop 4.3 percent, after a 1.9 percent gain last year.

The picture looks better for Los Angeles, San Diego and Riverside, though, with the forecast for small declines about half the size of their modest gains in 2010.

Another rough year predicted for "sand states"

It's expected to be another rough year for the Tucson, Ariz. and Jacksonville, Fla. markets, with additional prices declines of more than 10 percent predicted on top of similar declines last year. Lesser declines are forecast for the rest of the Florida, Arizona and Nevada markets, which have been some of the nation's hardest-hit since the crash began.

Only three metro areas that experienced price increases in 2010 are expected to continue rising in 2011: Washington, D.C. Houston and Honolulu. Honolulu posted the nation's biggest price gains last year, up 7.2 percent and is expected to add another 3.4 percent in 2011.

The metro area around the nation's capital appears to be the nation's healthiest real estate market, with a 6.5 percent increase predicted for 2011, on top of a 5.3 percent gain in 2010. Price gains in Houston are expected to remain steady, with a 3.6 percent increase in 2011 expected to follow a 3.3 percent rise recorded last year.

Published on January 7, 2011