Think housing is recovering? Think again.

    And delinquencies already account for more than 10% of all mortgages. These defaults aren't just on subprime ARMS anymore either, with prime fixed-rate loans now representing 37% of all delinquent loans. Moody's forecasts about 1.9 million homes will be taken from their owners this year, with a little over a million more going back to the banks in 2011. These can be added to the 6.3 million vacant homes currently sitting idle across America.

    Many defaults have yet to be figured into the housing market because banks are sitting on them or they are being held back due to government programs like the federal Home Affordable Modification Program. LPS Applied Analytics has estimated that banks currently have about 1.1 million foreclosed homes in their inventory and that another 4.8 million mortgages are likely to end in foreclosure. At some point these homes will go on the market, further depressing prices.

    But they won't be alone. Regular sellers have been coming out of the woodwork. NAR reported that the number of previously-owned homes placed on the market has risen quickly (reaching more than 4 million now) and that this inventory continues to far outpace the number whittled away through sales. The additional inventory is not a "healthy" development, said their chief economist, Lawrence Yun.

    And it's just going to get worse. As analysts at Zillow noted last week, U.S. homeowners are so confident in the value of their homes that many of them plan to put up for-sale signs in their front yards. Zillow said that 7% of homeowners they polled were "very likely" to try to sell their homes in the next twelve months if the housing market seemed to be improving.

    If 7% of all homeowners hit the market, that would equal about 5.3 million homes, more than the number of existing homes that sold all of last year. That's a lot of housing. Buyer beware.