Year-end home prices for 2007 recorded steep declines, as prices dropped at double-digit rates in eight cities, according to the Standard & Poor's S&P/Case-Shiller Home Price Indices.

The Case-Shiller U.S. National Home Price Index, which covers all nine U.S. Census Bureau regions, was down 8.9 percent in the fourth quarter of 2007 compared to the fourth quarter of 2006, the worst one-year decline in the 20-year history of the index.

"We reached a somber year-end for the housing market in 2007," said Robert Shiller, professor at Yale University and chief economist at MacroMarkets.

"Home prices across the nation and in most metro areas are significantly lower than they were a year ago," he said.

The Case-Shiller indices are designed to measure the growth in the value of residential real estate in various regions across the U.S. The index includes 23 indices-20 metro regional indices, two composite indices, and a national index.

Patrick Newport, U.S. economist for Global Insight, said that with home inventories so high, further declines in home prices may be in the cards.

Newport said between 1990 and 2000, the 10-City Composite Index, after adjusting for Consumer Price Index inflation, hardly changed. However, between 2000 and 2006, the index's real value rose nearly 80 percent. Since peaking, the real price has dropped about 15 percent, he explained.

"These back-of-the-envelope calculations imply that housing prices remain vastly overvalued," he concluded.