The CoreLogic December Home Price Index shows that home prices fell during the last month of the year and provides the first look at the overall downward trend of the housing market in 2011.

According to the index, December home prices, including distressed sales, fell 4.7 percent in 2011. When excluding distressed homes, prices only dropped 0.9 percent, a sign that the high inventory of distressed homes continues to hinder both prices and the market from recovering.

The report also shows a decrease on a month-to-month basis, as home prices fell 1.4 percent in December from November, marking the fifth consecutive month of lower home prices. The data firm reports that the last month of the year was the first to see a monthly price gain, as they rose 0.2 percent when excluding distressed sales.

The index shows that when including distressed sales, Montana saw the highest appreciation in December, up 4.4 percent from the previous month. Other states that saw increases include Vermont, South Dakota, Nebraska and New York. When excluding distressed sales, Montana still saw the highest gain with 7.7 percent, followed by South Dakota, Indiana, Alaska and Massachusetts.

CoreLogic reports that the greatest depreciation was in Illinois, where prices dropped 11.3 percent in December. Other states with declines include Nevada, Georgia, Ohio and Minnesota. When not counting sales of distressed homes, foreclosure-filled Nevada saw the greatest depreciation, with prices down 9.7 percent, followed by Minnesota, Arizona, Delaware and Michigan.

When comparing home prices during the peak of the housing market to current values, the report shows Nevada saw the deepest cuts, depreciating by 60 percent. Other states with declines include Arizona at 51.9 percent, Florida at 50 percent, Michigan at 43.7 percent and California at 43.5 percent.

Areas that were hit the hardest by the housing market slump appear to be having the most difficult time recovering as short sales and real estate-owned transactions continue to make up the majority of their markets.

"While overall prices declined by almost 5 percent in 2011, non-distressed prices showed only a small decrease. Until distressed sales in the market recede, we will see continued downward pressure on prices," said Mark Fleming, chief economist for CoreLogic.

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