BY NICK TIMIRAOS

Home prices fell to fresh lows in December, but economists say that a drop in the number of homes listed for sale could help stabilize prices in parts of the country this year.

Home prices fell by 4% last year, according to the Standard Poor’s/Case-Shiller index that tracks 20 metro areas. Prices dropped by 1.1% for the three-month period ending in December compared with the same period ending in November.That was slightly better than November’s reading, when prices were down 1.3% from October.

Tuesday’s report is the latest evidence that the housing market still faces a cloudy outlook after …