by James R. Hagerty, Wall Street Journal

5 July 2007, p. B8

PJ-AK503A_HOUSI_20070704172107“The number of homes on the market in 18 major metropolitan areas continues to grow.

“Total listings of homes in these metro areas at the end of June was up 2.5% from May, according to figures compiled by ZipRealty Inc., a national real-estate brokerage firm based in Emeryville, Calif. The data cover all listings of single-family homes, condominiums and town houses on local multiple-listing services in those areas.

“In another sign of weakness for the housing market, the National Association of Realtors reported this week that its index of pending home sales in May declined 3.5% from a month earlier to stand at 97.7. The index, which is down 13% from a year earlier, equates the 2001 level of activity to 100. The group considers a sale pending when a contract has been signed but the transaction hasn’t been completed.

“The rise in the number of homes listed in June was broadly in line with historical trends. In recent years, inventories on a national basis have tended to rise in June. On average over the past two decades, though, they have fallen slightly during that month.

“The continued growth in supply suggests further downward pressure on house and condo prices in parts of the country. After soaring in the first half of this decade, prices in many markets have been flat to lower over the past two years amid a supply glut and more-cautious mortgage lending.

“Thomas Lawler, a housing economist based in Vienna, Va., predicted that the S&P/Case-Shiller home-price index, a national measure, will decline about 7% this year. He said that the housing market is unlikely to start recovering before mid-2008 at the earliest and that the recovery probably will be gradual. Among the wild cards is whether builders will slash production, which would reduce the glut of homes.

“The biggest increases in inventory last month were in metro areas where prices generally have continued to rise. Inventory was up 9.2% in the Seattle area and 6.5% in the San Francisco Bay area. Inventories have been lean in those areas in recent years, pushing up prices, but supply now is catching up with demand.

“Inventories are up sharply from a year earlier. For the 15 cities for which year-earlier comparisons were available, inventory was up 23%. But inventory in the Boston area was down 3.9% from a year earlier, while San Diego was up just 0.3%.”