John Burns, a Southern California-based real estate consultant, told more than 1,000 people at the 2007 Southern Nevada Housing Day that Las Vegas builders moved quickly to correct an oversupply last year by drastically scaling back housing starts, which were down a reported 30 percent in 2006.

By some accounts, Las Vegas now has a one-month to two-month supply of new homes.

The event was sponsored by the Southern Nevada Home Builders Association.

Meanwhile, the number of home closings recorded in the Las Vegas Valley in January fell to its lowest point since May 2004. Burns said there are still problems for builders to overcome but the number of sales of new homes will soon stabilize.

"We are starting to see sales improve (in the last six weeks) and signs that (the slowdown) won't last much longer," Burns said. "Wall Street doesn't think it will last much longer."

Builders must continue to trim costs and keep their prices down to maintain affordability, Burns said. With a large inventory of resale homes as competition, builders won't be raising their prices anytime soon, he said.

The long-term outlook for the new home industry is good because of strong job growth and population growth that is aided by California's lack of affordable housing and unfriendly business environment, factors that will drive more companies to Nevada, Burns said.

As for the existing home market, Burns said prices will continue to depreciate as long as listings remain high, and he said he doesn't expect the market to reach "healthy levels" of 15,000 homes until 2008 at the earliest. The Greater Las Vegas Association of Realtors reported there were nearly 24,000 single-family homes, condos and town homes on the market in January.

"I think resale prices are going to be down 6 percent (in 2007)," Burns said. "The new home guys have dropped their prices at least 10 percent and the resale market needs to do the same, and it may take another year or two to do that. Homebuilders do it because they have urgency to sell homes and pay their overhead. Homeowners don't have inventory. It comes down to nobody wants to sell their home for less than their neighbor."

Burn's prediction may already be happening.

The median price of existing homes has fallen $10,000 in the last three months and existing homes sold in January for a median price of $278,000 - the lowest price since June 2005 when homes sold for $273,000, according to SalesTraq, which tracks housing statistics.

The decision by more homeowners to put their homes on the market in January isn't good for the resale market in holding the line on prices, one housing analyst said.

"You got big inventory out there, and you are going to have some price wars," Dennis Smith, the president of HomeBuilders Research, told the audience at the Las Vegas Convention Center.

By the end of 2007, however, Smith said he expects prices to remain flat.

Las Vegas housing analyst Steve Bottfeld, who released his monthly housing report Tuesday, said he expects existing-home inventory to reach 24,000 in March and slowly decline to 16,000 by the end of the year.

Bottfeld, who tends to be optimistic about the market, said prices may decrease in the first half of the year before climbing in the fall.

"The disturbing aspect of the still-swelling MLS inventory is that 44 percent of those listings are vacant, and a significant number of them may fall into foreclosure," Bottfeld said. "This will serve as a dampening force on existing home prices."

In the new home market, sales were off 26 percent in January compared to January 2006 and the 2,135 homes sold were the fewest since May 2004, SalesTraq reported.

The median price of new homes was $336,309 in January, down from $341,924 in December but nearly 11 percent higher than January 2006 when the price was about $304,000, the firm reported.

With a new subdivision opening in Henderson called Inspirada, new home permit activity picked up slightly in January at 1,002, which is the highest total since August.

Permits are down, however, nearly 54 percent from January 2006.

Between September and the end of January, only 4,422 new homes have been permitted while more than 13,000 new homes have been sold, Bottfeld said.

"If we continue to see new home permits decline, will that impact the size of our existing home inventory?" Bottfeld asked. "The answer to that question is how much demand will there be in the second quarter. The measure of 2007 will be taken early, and it will be new home statistics."