Housing glut: From bad to worse

NEW YORK (CNNMoney.com) -- The number of homes for sale in major markets ballooned in April, according to a new industry report, adding further evidence that the U.S. housing slump is still trying to find a bottom.

In April, there were 743,367 existing house and condo properties listed for sale in the 18 major metro areas tracked by ZipRealty, a California-based real estate broker.

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That was up 33 percent from a year earlier and 7.2 percent higher than in March.

Some of the markets ZipRealty covers suffered far bigger inventory expansions than the total jump. Los Angeles reported a 39.7 percent leap since April of 2006, Miami climbed 53.9 percent and Seattle soared 63.2 percent.

The year-over-year stats only tell part of the story. Many of the areas covered had already experienced a significant sales slowdown and an expansion of the number of homes for sale well before April 2006.

The once remarkably hot Las Vegas metro market, for example, now has more than double the number of homes on the market - 26,243 compared with 13,238 - than it did in September 2005, when the local housing market was near its peak.

In Los Angeles, inventory has more than tripled since July 2005, as it has in Miami since October 2005. In Phoenix, there were 50,062 homes for sale during April, compared with 11,656 in July 2005, for more than a threefold jump.

The rise in existing home inventory has dampened builder confidence, already low from the fallout over poorly performing subprime loans. When inventories of new and existing homes expand, developers pare back on building.

The Census bureau reported Wednesday that housing starts rose in April, but building permits, which are often seen as a measure of builder's confidence in the market, sank a whopping 8.9 percent.

"Permits are a much better indicator of the state of the housing market than starts are," said Patrick Newport, an economist with Global Insight. "The margin of error in the permits data is much lower and it's not affected by weather. Housing start stats are like a drunken sailor; they really zig-zag."

ZipRealty's inventory data covers about 20 percent of the total U.S. real estate market, but since it has information from cities throughout every region, including most of the biggest metropolitan areas, it provides a picture for the nation as a whole.

One notable absence in the broker's survey is the largest metro area in the United States: New York.

The Big Apple is a special case in real estate. Brokers in the city do not share information to the same degree - through multiple listing services - that they do in the rest of the United States, so data can be harder to compile there.

According to Jonathan Miller, of Miller Samuel, a real estate appraiser and consultant in New York, inventory in the metro area is fairly steady. It has risen modestly in suburban areas but dropped in town.

With inventory low, prices have continued to increase in Manhattan, bucking the national trend.

Even so, an ongoing building and co-op conversion boom is adding massive numbers of units to the island's housing stock So far, demand has kept pace with the added supply.

"If demand takes a breath, though," said Miller, "you could see inventory pile up quickly."

Just like in many of the other U.S. markets.