The Case-Shiller Housing Price Index, through September. U.S. home prices are expected to continue falling in data to be released Jan. 31. S&P/Case-Shiller

U.S. home prices are expected to keep falling in S&P/Case-Shiller Housing Index data through November 2011, to be released on Tuesday, Jan. 31.

The real estate firm Zilllow projects a 3.2 percent decline in year-over-year home prices for the 20-City Composite Index and a 2.7 percent drop in the 10-City Composite Index. The declines would be slightly less than the three percent and 3.4 percent drops in the previous month.

Despite the continued weakness in the housing market, Zillow said there is light at the end of the tunnel.

“Encouraging precursors to a true stabilization of home values are falling into place as the new year begins,” said Stan Humphries, Zillow's chief economist, in a statement. “Home sales will show a more consistent upward trend this year, slowly reducing the amount of vacant housing inventory. This increased demand will eventually start to put a floor under home values later this year.”

Last week, the National Association of Homebuilder's confidence index rose to its highest level since mid-2007, signaling that more developers viewed the housing market favorably. Housing was also a strong contributor to the 2.8 percent GDP growth in the fourth quarter of 2011, with residential investment increasing by 10.9 percent.

But it remains to be seen if these positive trends will impact the Case-Shiller Index, which draws from closings data that is delayed by months.

The Index has demonstrated the disparity between local markets, although the price declines have been widespread, with 18 of the 20 major metro areas report annual price declines in data through October.

The only two cities with positive annual price changes in October were Washington, D.C., and Detroit, but the cities have very different housing pictures. In Washington, the federal government provides a strong employment base, which has sustained the area. In Detroit, housing prices have fallen more than 45 percent of its value since the peak and may have hit bottom, according to some housing experts. The resurgence in automakers such as General Motors has also boosted the local economy, and strong sales in December may continue that trend.

There have been more signs of weakness in Atlanta, which has been slammed with foreclosures, and posted a monthly home price decline of five percent and year-over-year decline of 11.7 percent in October. Cities in the midwest, including Chicago, Cleveland and Minneapolis, also had monthly declines of one percent or greater in October, despite stronger activity in last year's spring and summer. Tuesday's data will indicate if these areas are rebounding, or if further declines have occured.

The consensus appears to be that a full housing recovery remains months, if not years, away. The overall picture is, at best, stable, wrote David Blitzer, chairman of the S&P's Index Committee, in a recent post.