A newly built home is shown as sold in a subdivision under construction in Carlsbad
Sales of new U.S. homes fell to a seasonally adjusted annual rate of 328,000 in March, the Commerce Department said Tuesday, but beat expectations by analysts. REUTERS

The S&P/Case-Shiller Housing Index is expected to show further price erosion throughout the country when figures are released Wednesday, according to analysts and housing experts.

Analysts polled by Reuters expect prices to drop year-over-year by 5.5 percent in 20 major U.S. cities in data through December 2011. Month-over-month, the 20-city index is expected to fall 0.6 percent.

The 5.5 percent annual drop would be sharper than the 3.7 percent decline recorded in November data, while the month-over-month fall would be smaller than November's 1.3 percent decline.

Despite recent gains in home sales and employment, the Index has demonstrated a continued slide in the nation's home prices since a temporary Federal First-Time Homebuyer Credit expired in 2010, which boosted interest for prospective buyers.

But the losses have been uneven, with prominent cities like New York, San Francisco and Washington, D.C., demonstrating relatively strong local markets. This trend is expected to continue, said Jonathan Miller, president and CEO of real estate appraisal firm Miller Samuel Inc.

I think we’re going to see tremendous regional and locational disparity in December data, he said. The majority of them are showing continued weakness.

Washington, D.C., and Detroit were the only cities to post annual price increases in the last month, demonstrating the importance of an improved job market. The Washington area has been sheltered by job cuts around the country because of the strong federal government employment base, along with related industries such as government contractors. Detroit has also recovered from a housing bottom as local automakers have seen sales rebound.

Atlanta, which has suffered from a mass of foreclosures, was down 11.8 percent from the prior year in November and hit a new pricing low during the month. Las Vegas, Seattle and Tampa, Fla., also had new pricing lows in November.

Case-Shiller's data isn't the most reliable indicator of the current housing market. It measures home sales through closings in property records, the most reliable indicator of sales. But closings are typically delayed by one or two months after the contract is signed, so next week's data will draw mostly from sales during last fall, which is considered weaker than the current economy.

The real estate firm Zillow, which forecasts a smaller year-over-year drop of 4 percent in December, expects home sales to continue to rise this year, even if overall prices do not.

While home values are expected to fall further in 2012 with a definitive bottom probably a year away, home sales are expected to pick up pace in 2012 stabilizing home prices across the nation, said Stan Humphries, Zillow's chief economist, in a statement.