Where did all this housing inventory come from? Just 18 short months ago, realtors were blathering on about the lack of supply pushing up housing prices. Today, housing inventory is exploding. Local MLS listings are bursting, and realtors are finding it difficult to keep up with the daily intake of listings from desperate sellers.

According to ZipRealty, in April housing inventory increased by 7 percent in the nation's 18 largest metropolitan areas. Moreover, in some cities, inventory increases reached double digits; San Francisco, up 19 percent; Washington, 17 percent; Orange County, Calif., 15 percent; and Seattle, up 14 percent.

With Lereah gone, the NAR are gradually coming to terms with the new housing reality. It lowered its forecast, predicting that sales of previously occupied homes will total 6.29 million, down 2.9% from 2006.

Despite these shocking increases in inventory, prices have for the most part remained flat or have only fallen slightly. However, in the face of growing signs of market saturation, denial is no longer an option for home sellers. Without radical and desperate price reductions, inventory is going to remain high for a long time to come.