Home prices fell 1.63% in December, but new listings are hitting the market well below that, according to analytics firm Altos Research. Prices fell in each of the 27 markets studied by Altos. Prices fell 4.77% in San Francisco — the steepest drop of any area, 3.71% in San Diego and 3.16% in Minneapolis. Altos said the declines reflect expected seasonal downturns, but unlike the darker forecast from Clear Capital, Altos believes there could be brighter days ahead. "The data reflect seasonal trends and will likely begin to increase modestly as the 'boom' of the spring real estate market begins," Altos said in its report. But a new chart from Altos shows a gulf between the median prices and new listings on the market (Click chart below to expand). The major Jan. 1 dip shows a weaker first quarter is on the way than either 2009 or 2010 when the homebuyer tax credit was boosting prices. The major damage being done to prices comes from the shadow inventory of foreclosed and repossessed homes. Standard & Poor's said it could take as long as 44 months for this to clear, but Altos said inventories were cut nearly 6% across the 10 largest markets in December. But again, the spring should bring more supply to meet new buyers on the market, according to the report. "As the spring housing market starts to swing into action, a spike in housing inventory can be expected, as sellers seek to capitalize on the most active period of the year for home sales," Altos said. Write to Jon Prior.