House prices tumble 18.5 percent in 2008

The drop in house price set a new record in 2008, falling 18.5 percent from December 2007 to December 2008, according to S&P's Case-Shiller home price index. That's slightly more than the 18.2 percent economists expected. The three hardest hit cities were Phoenix (down 33.9 percent), Las Vegas (down 32.9 percent) and San Francisco (down 31.2 percent).

Things get even worse if you look at the drop in prices since December 2006. The 20 city composite index is down 25.9 percent. The hardest hit cities since December 2006 include Phoenix (down 44 percent), Miami (down 41.3 percent) and Las Vegas (down 43.3 percent). These cities may be nearing the bottom, since economists have estimated that housing prices need to fall about 50 percent to get back to what is considered pre-bubble pricing. But markets do tend to over-correct, so there may still be some downside in these areas.