Home builders should offer incentives or slash prices to sell off hundreds of thousands of vacant new houses glutting markets nationwide, housing experts warned Wednesday at the International Builders Show in Orlando.

In addition, until the new home inventory is gone, builders should hold off constructing more homes, said David Seiders, chief economist for the National Association of Home Builders.

"I'm telling builders that we absolutely have to move these houses" before the real estate market will rebound, Seiders said.

The Tampa Bay area is among the places with an oversupply of new homes on the market.

There were 4,606 vacant new homes in the Bay area at the end of the fourth quarter of 2006, an increase of 1,700 from the same period a year ago, according to housing research firm Metrostudy.

Tony Polito, a Tampa-based director for Metrostudy, said the Bay area is faring better than the rest of Florida, which has an average of a four-month supply of new homes for sale. Inventory in the Bay area is at 2.8 months, he said, meaning it would take that long to sell all the homes at the current sales pace.

Nationwide, economists estimated home builders constructed about 600,000 more homes during the past three years than the market could absorb.

The number of homes under construction is dropping, and builders are offering incentives, such as free upgrades and discounted prices.

Polito estimates it will take three to six more months to work through the inventory in the Bay area.

Economists from mortgage giants Fannie Mae and Freddie Mac predicted Wednesday at the builders conference that the housing market will see more drops in the number of sales and prices in some markets, but that the cool-down will bottom out later in the year and a gradual recovery will begin.

"But that doesn't mean we'll bounce back to 2005 levels," said Frank Nothaft, chief economist for Freddie Mac. "Absolutely not."

The new home market is suffering in part because of the record number of existing homes on the market, economists said.

More than 34,000 existing homes are on the market in Hillsborough and Pinellas counties, according to local real estate trade groups.

The slowdown in building and the need to move the inventory of new and existing homes is good news for some, Nothaft said. It has gotten tougher to afford a home because of the record price increases since 2000, he said.

If home prices come down in some markets, more people will buy, he said.

In the Tampa-St. Petersburg-Clearwater metropolitan area, the median sales price of an existing home in December was $230,800, up 3 percent from the same month in 2005, according to the Florida Association of Realtors. In December 2000, the median sales price was $108,200.

Reporter Shannon Behnken can be reached at (813) 259-7804 or sbehnken@tampatrib.com.