National home prices fell 0.7 percent in December, according to the latest numbers from Denver-based Integrated Asset Services, LLC (IAS). Save for a brief rally throughout last summer, the company’s benchmark for U.S. housing values was down nearly all of 2009.

Finishing the year with five straight down periods, the IAS360 House Price Index was off 5.3 percent for the 12-month stretch. This relatively modest decline follows an 11.7 percent drop in 2008.

Now more than 22 percent down from its high-water mark set in July 2007, the index has fallen to a level last seen in mid-2004, IAS said.

“There’s something to be said for the fact that the decline has at least slowed,” said Dave McCarthy, president and CEO of Integrated Asset Services, “but I still think the risk of continued weakening in house prices nationally is considerable.”

Of immediate concern is the approaching end to several major government initiatives for the housing market, McCarthy said, not the least of which is the first-time homebuyer tax credit. While the incentive will likely result in additional sales through the first half of the year, McCarthy fears the program will wind down just as a new wave of distressed properties enter the marketplace. The combination of events could result in a pronounced “double dip” in home prices, McCarthy said, echoing the same ideas in a just-published study by Zillow.

“The potential for another wave of distressed property coming to market remains very high,” said McCarthy. “While the government’s mortgage modification program may have slowed the number of foreclosed properties coming to market, its near complete failure is likely to result in a whole new wave of distressed activity down the road.”

On the positive side, the IAS360 showed that the South census region continued its streak of gains with another 2.3 percent increase in home prices in December. With huge price declines having dramatically improved housing affordability, states across the region posted positive results. Residential values in Alabama and Georgia, for example, both jumped by more than 10 percent.

The Northeast, meanwhile, fell for the fourth month in a row, losing another 1.7 percent in December. The West, too lost ground for the month, slipping 1.0 percent, but the Midwest turned in the worst performance by far, dropping an outsized 4.2 percent. Steady declines in the Midwest region have swept prices back to levels seen in late 2003, according to IAS’ analysis.