Futures contracts on the housing market that trade on the Chicago Mercantile Exchange, indicate Las Vegas will have the largest decline in the nation.

Investors expect current prices to drop 5.6 percent by May, said Justin Walters, co-founder of New York-based money management and research firm Bespoke Investment Group LLC.

Some housing analysts are predicting drops in Las Vegas home prices of 15 percent to 20 percent, declines that would add to the amount home prices have experienced since last year.

SalesTraq reported median new-home prices in August were $309,241, 13 percent below their peak in April 2006.

Median existing-home prices were $270,000 in August, down 6.8 percent from their peak in June 2006.

"We have not hit the bottom yet in Las Vegas," said Tim Sullivan, president of the Sullivan Group Real Estate Advisors, who will host a housing seminar Tuesday morning at the Four Seasons hotel at Mandalay Bay. "The overriding theme is we have too much supply, a weakening economy, and we have got to figure out a way to survive this downturn."

At the end of August, there were a record 27,321 resale homes on the Multiple Listing Service, according to SaleTraq.

That is nearly a 16-month supply of homes.

The increasing supply of homes is exacerbated by foreclosures, as Nevada is ranked No. 1 in the country in its foreclosure rate per household.

Coupled with the belief of consumers that prices will go lower, there is no motivation for people to buy, Sullivan said.

He said prices should continue to erode into 2008, but Sullivan can't predict how far they will fall in the new-home and existing-home markets.

More adjustable rate mortgages will reset in early 2008 and those higher mortgages could further increase foreclosures, he said.

In addition, the credit crunch continues to make it more difficult for people qualify for loans to purchase homes.

"What we are concerned about is what's going to happen to the economy," Sullivan said. "If we have a recession, we will have job losses and consumer confidence will plummet."

One sign of the shaky state of the Las Vegas housing market: Astoria Homes, a private homebuilder based in Las Vegas, announced it will hold its first-ever sale.

The company's new-home sales are down 42 percent from 2006.

Astoria's sale runs Oct. 12 through Oct. 14, showcasing homes from Aliante in North Las Vegas to Southern Hills in Henderson, its development in Centennial Hills and another near Summerlin.

Prices have been discounted by as much as $200,000, and its least expensive homes during the sale will be marketed in the $170,000s after a $50,000 discount.

"We want to be busy," said Astoria Homes President Tom McCormick. "It is a reflection of the market. We have never had a sale in our 12 years in business, and we have to be more aggressive about adjusting our pricing."

McCormick said he believes prices in the new-home market are about as low as they could go but sees more downside in the resale market, where sales are off 34 percent from 2006.

Las Vegas as a weather vane: For national economists and housing experts, Las Vegas' housing market is seen as a leading indicator for national housing trends.

Tumbling home prices in Las Vegas will show how far and how fast U.S. property values will fall in 2008 as the housing decline enters its third year, said William Wheaton, an economics professor at the Massachusetts Institute of Technology.

"Las Vegas is an important barometer for where the rest of the nation's home prices are going because it's going to show us how quickly the investors head for the doors," Wheaton said. "It will put the floor under the housing correction."

If that's the case, it won't be pretty. Edward Leamer, an economist at UCLA, eho predicts a 20 percent slide in prices in Nevada, California and Florida over the next three to four years.

Nevada had one of the biggest price bubbles, and so it will have the biggest drops, said Patrick Newport, chief U.S. economist at Lexington, Massachusetts-based Global Insight.

He predicted the Las Vegas housing slump could last until 2010, even if gamblers and vacationers continue to boost the city's economy. Newport suggested prices could fall 15 percent.

The continued predictions of doom and gloom for the Las Vegas housing market has drawn the ire of Steve Bottfeld, executive vice president of Marketing Solutions, a Las Vegas housing consultant who has long had a sunnier outlook than other analysts.

Bottfeld said he wouldn't be surprised that once the September housing stats are compiled that August may have been the bottom of the market.

He said outside analysts don't take into account growing vertical sales in the market that are part of changing dynamics.

Bottfeld has predicted a recovery in 2008 as new resorts come on line.

"I am thinking that the price of the new-home segment is very close to the bottom, maybe a point or two to go," Bottfeld said. "The pricing in the existing home sector is about where it is going to get."

Most analysts see the Las Vegas housing slump lasting longer than Bottfeld does.

"It's going to take up to two years for the market to work itself out," said Ryan McPhee, owner of RPM & Associates, a Las Vegas real estate investment company. "We have too much inventory, and more on the way."

Houses set in areas with multiple foreclosures are seeing their values decline even in cases where owners are paying their mortgages on time, McPhee said.

When the value of a house is less than the mortgage, owners who want to sell have to pay the lender the difference to buy out the loan, in some cases as much as $50,000, McPhee said.

"What we need more of in Las Vegas is home equity," he said. "It's not that prices have plummeted. But if you bought near the top with no money down, you're under water."

Some of the owners who bought in the early years of the boom are stuck, even after seeing prices double in five years, McPhee said.

"Some people have seen their home values soar, but a lot of them refinanced to pull out that equity and spent it on cars or gambling," he said.

The median price of existing homes in Las Vegas stood at $164,000 in 2003, but that quickly jumped to $230,000 in 2004 and topped out at $285,000 at the end of 2006.

Speculators and low borrowing costs drove the drive up prices, the experts said.

What happened in Las Vegas changed the way Americans look at real estate, said Diane Swonk, chief economist at Mesirow Financial Inc. in Chicago. After Las Vegas, the investment boom spread across the country from Florida to Arizona and California, she said.

"The city that gave us gambling gave us house gamblers," Swonk said. "Buying a home became like buying a stock on margin with no money down."

Almost half of Las Vegas home sales in 2005 and 2006 were to people who intended to resell quickly for a profit, according to data compiled by Fannie Mae, the world's largest mortgage buyer.

Nationally, investment purchases accounted for 28 percent of the sales in 2005, the peak of the housing boom, according to the National Association of Realtors.

The construction industry in Las Vegas accounts for a bigger share of the local economy than any city in the U.S., Wheaton said.

So far, the decline in homebuilding has been offset by an increase in commercial construction projects, he said.

"If we see those segments of the construction industry begin to follow homebuilding into a funk, you will see a recession," he said.