The S&P/Case-Shiller composite index of home prices in 20 cities increased by 4.5 percent in December from the same period last year.
Analysts polled by Reuters had expected a year-over-year increase of 4.3 percent, matching November's increase, the slowest since October 2012.
San Francisco and Miami saw the fastest pace of home price appreciation, with increases of 9.3 percent and 8.4 percent, respectively.
Appreciation was muted on a month-to-month basis, with prices up just 0.1 percent in the 20-city index. Home price decreases in Chicago and Cleveland of 0.9 percent and 0.5 percent, respectively, offset gains in Miami and Denver, where homes appreciated 0.7 percent and 0.5 percent.
"The housing recovery is faltering. While prices and sales of existing homes are close to normal, construction and new home sales remain weak," David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices, said in a statement.