Millions of American families are still facing eviction, which is weighing on recovery, says Yale professor Robert Shiller.

"There's likely to be millions of more families evicted from their homes because of nonpayment on their mortgages," Shiller tells CNBC.

The economy is still lagging and jobs demand weak.

"Our sweaty palms is the symptom we have right now and it's not encouraging. The employment population ratio is kind of stuck at a bottom at 58.5 percent. That's a sign that while the unemployment rate is down, jobs aren't there and that is a chronic, smoldering problem that is weighing on people's psyches," Shiller adds.

Shiller, a designer of the S&P/Case-Shiller Home Price Index, says that the indicator has been falling since 2006.

A first-time home buyers tax credit halted the decline, but once such a measure fades from influence, prices will bounce along the bottom before recovering.

"They are still going down but they may turn up — it's not obvious they're not going down at a rapid clip," Shiller says.

"The problem is if they go down much more at all, we're going to have a worse housing problem and it's going to hurt the banks and mortgage lenders."

The latest S&P/Case-Shiller Home Price Indices showed annual declines of 3.9 percent and 3.8 percent for the 10- and 20-City Composites, respectively, in January.

A Reuters poll sees the index largely unchanged for 2012 before rising 2.0 percent in 2013.

Due to the nature of the housing industry, declines take a long time to correct before slowly regaining and rebuilding momentum.

"We are expecting a gradual improvement, but if we get a big wave of new foreclosures coming to the market, price declines could be even greater," says Yelena Shulyatyeva, an economist at BNP Paribas in New York, according to Reuters.

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