Home prices in 20 US cities probably declined at a slower pace and consumer confidence improved, signs the economy gained strength heading into 2012, economists said before reports this week. Property values dropped 3.2 per cent in October from the same month in 2010, the smallest year-over-year decrease since January, according to the median forecast of 20 economists before a report due out tomorrow from S&P/Case-Shiller. Consumer confidence rose to a five-month high in December and more people signed contracts to buy previously owned homes than a month earlier, other data may show. Rising builder confidence, fewer unsold new properties on the market and a pickup in construction all point to improvement in the industry that triggered the last recession. Real estate is still facing another wave of foreclosures that may keep pressure on home prices, making for an uneven housing recovery. \"We\'ll continue to see prices drop,\" said Mark Vitner, a senior economist at Wells Fargo Securities in North Carolina. \"The middle of 2012 is when we think prices will actually bottom.\" Economists surveyed projected the gauge of residential real-estate values declined 0.3 per cent in October from the prior month, when it fell 0.6 per cent. The index was down 31 per cent in September from its July 2006 peak. The year-over-year gauge provides a better indication of trends in prices, the group has said. The panel includes Karl Case and Robert Shiller, the economists who created the index. Figures on December 29 may show pending sales of previously owned homes rose 1.5 per cent in November after a ten per cent jump, economists said before a report from the National Association of Realtors. Reports last week showed a pickup in demand for houses. Sales of previously owned homes, which make up about 94 per cent of the market, rose four per cent to a 4.42 million annual pace, the most since January, the National Association of Realtors said December 21. Purchases of new single-family properties advanced 1.6 per cent to a 315,000 annual pace, a seven-month high, figures from the Commerce Department showed December 23. The increase pushed the number of new homes on the market to a record low. Those gains have buoyed builders\' stocks since the end of the third quarter. The Standard & Poor\'s Supercomposite Homebuilding Index, which includes Toll Brothers and Lennar Corp, has climbed 32 per cent, while the broader S&P 500 has gained 12 per cent. As housing stabilises and employment strengthens, consumers are becoming more optimistic. Confidence rose to 58.6 from 56 last month, according to the Bloomberg survey median before a report due tomorrow from the New York-based Conference Board. Other surveys reflect gains in optimism. The Bloomberg Consumer Comfort Index improved to minus 45 in the period ended December 18 from a reading of minus 49.9 the prior week, marking the biggest seven-day gain since January. The Thomson Reuters/University of Michigan index of consumer sentiment rose to a six-month high in December. Some homebuilders say an increase in sentiment is needed to help boost demand.