There are signs that the growth in inventory of homes for sale in 18 major markets is beginning to level out, according to the latest numbers from Zip Realty, the Emeryville, Calif.-based real estate brokerage.

Inventory of homes for sale increased only 1.23% in February from the month before, which came on top of a 1.49% increase from December to January. That compares with monthly increases of 5% or more at this time last year. The rise in inventory began to slow in the second half of 2007.

However, inventories were still 16.86% higher in February 2008 than they were a year before. Zip put the total number of homes for sale in the 18 major markets it tracks at 745,934 in February.

Significantly, there were decreases in inventory in several formerly overheated markets, including a 4.4% drop in Las Vegas, which is still up 12% from February 2007. Among other such markets, Los Angeles inventory dropped 0.4% but remains up 21.1% year over year; Orlando was down 0.3% and remains up 14.5% from last year; Tampa was down 0.1% and is now 0.2% below February last year. The only other market showing a month-to-month decline was Dallas, which was down 0.2% and is down 0.8% from the same time last year.

Another formerly overheated market, Orange County inventory increased only 0.1% in February, leaving it with 23.4% more homes for sale than in February, 2007. Miami, posted a 0.9% month-to-month increase and is up 14.4% from February, 2007. Phoenix was up 0.6% sequentially; 20.6% year over year.

Not all the data was positive, however. Several markets that had managed to escape the inventory glut earlier in the downturn are now showing big gains.Among them are Seattle, where inventory was up 5.4% month to month and 52.8% year over year. Likewise San Francisco, which shot up 4.8% from January and 51.1% from last February.

Meanwhile, the percentage of homes on the market that had taken at least one price reduction continued to hover between 40% and 50% in most markets.

The Zip report is based on Multiple Listing Service data in the 18 major markets. It also tracks data in several smaller markets but does not yet have enough of a historical record in those markets to make meaningful comparisons.

Learn more about markets featured in this article: Los Angeles, CA.