NEW YORK (AP) - The Las Vegas housing market, the nation's ninth largest, will be flat or slightly lower in 2006 because of a rising inventory of homes for sale, Merrill Lynch said Tuesday.

Existing home sales in Las Vegas are down 36 percent year over year.

"We do not expect selling conditions to improve until existing home listings approach their 2-year average of 18,800 units from their current level of 25,200," Kenneth Zener, an analyst at Merrill, wrote in a research note.

Housing prices grew 17 percent a year over the last five years, Zener wrote. Affordability in the city reached a 22-year low in 2005 and the median price of a house in Las Vegas was $319,000 by the second quarter of 2006.

With homebuilders under increasing pressure, analysts are taking a hard look at specific housing markets to try to divine which direction prices may take. Homebuilders' stocks have been battered as slower sales and concerns about affordability have buffeted the sector.

In 2005, the top builders in Las Vegas were KB Home with a 10 percent market share and Pulte Homes Inc., which had a 9 percent market share. Other homebuilders vastly expanded their work in the area since 2000, with the number of units built by MDC Holdings Inc. growing 45 percent and the number built by DR Horton Inc. growing 29 percent.

Construction jobs represented 20 percent of total job growth in 2005, 29 percent in 2004 and 25 percent in 2003, Zener wrote.