Nationally residential property prices fell 10.6% last year and dropped 18% from their peak in 2006, according to figures from First American CoreLogic's home price index.
The price falls are affecting 35 of the 50 states in the US with California suffering most with a 26.9% decline in home prices, followed by Nevada with a 22.8% fall, Arizona at 19% and Florida 18.2%.
Since the crest of home prices in July 2006, California has seen a 42% cumulative plunge, while Nevada has experienced a 39% drop in home prices.
'Collateral risk continues to depress the housing market with the top four states for price depreciation accounting for nearly half of all outstanding foreclosures,' said Mark Fleming, chief economist for First American CoreLogic.
The company also reported that the number of unique foreclosure filings in 2008 surged 76% to 3.4 million, compared to 1.9 million in 2007 and 1.1 million in 2006.
'Economic risk is also rapidly rising with California, Nevada and Rhode Island standing out as being among the top 10 states for both price depreciation and highest unemployment. Until home prices and economic activity stabilize, mortgage distress will remain high,' explained Fleming.
'Those areas that experienced the highest home price appreciation included Binghamton, New York, Plattsburgh, New York, Cedar Rapids, Iowa, Rocky Mount, North Carolina, and College Station, Texas.
But for some the falling real estate prices are good news. Figures from the National Association of Realtors have revealed a surprise rise in home sales in December, as buyers took advantage of lower house prices.
The organisation said sales of existing homes rose 6.5% to an annual rate of 4.74 million, from 4.45 million in November.
However, Lawrence Yun, the association's chief economist, believes that buyers will continue to have the advantage over vendors for the medium-term.
Its figures also show that existing home prices fell by 15.3% in December, compared with the same period in 2007, with almost half of transactions the result of the vendor selling at a discounted price.
The US Commerce Department has revealed that homebuilders began work on the least number of homes in December. Housing starts fell 15.5%, to an annually-adjusted 550,000, well below analyst's expectations of 605,000, and the lowest figure since records began in 1959.
