California's long recession was a windfall for states like Nevada, Oregon, and Utah as migrating Californians fueled job growth and home construction. But that good fortune could be turning into a liability.

With fewer Californians trekking out, economists worry there could be a glut of homes in cities such as Las Vegas, Salt Lake City, and Portland, Ore., unless building ratchets down rapidly. Such an oversupply could eat into prices and make construction and mortgage lending riskier.

"As net out-migration from California slows, you can easily overbuild," said Howard L. Roth, director of regional economics at Bank of America.

Like others in the region, Bank of America branched out of California into the fast-growing Northwest and Mountain West. Now the bank is keeping a watchful eye on real estate in those regions, Mr. Roth said.

But gluts can be hard to spot before they happen, he added. "Mortgage lenders don't see it coming. Developers don't see it coming."

Washington Mutual Inc., the other big real estate lender in the West, doesn't expect to be hurt by a downturn because it doesn't make construction loans in the hottest markets, such as Las Vegas, according to John R. Donohue, executive vice president of residential lending operations.

"A glut will have an impact on builders and on home prices," Mr. Donohue said, but "I really don't think it will have an impact on a lender such as us."

To be sure, no one is expecting a full-blown real estate crisis, of the sort that exacerbated California's recession earlier this decade. Job growth is too strong in industries such as software and chip building. Moreover, home building is slowing down in response to falling demand.

Indeed if interest rates remain low and the national economy strong, demand and supply will even out sometime next year, said Mark Zandi, chief economist of Regional Financial Associates, West Chester, Pa.

But "if the economy were to falter, more substantive risk would present itself," Mr. Zandi said.

"Homes would sit on the market, house prices would begin to weaken or even fall." That would hurt developers and lenders that finance construction, Mr. Zandi said. All mortgage lenders would be affected, because business would slow down and loans become more prone to default as homeowner equity dropped, he said.

Whether or not it causes a glut, the slowdown in the outflow from California has been dramatic. At its peak in 1994, California lost a net 189,113 people to other states.

Most settled in the West-and the biggest winners were Nevada, which gained 40,000 Californians that year, followed by Colorado and Oregon, which each gained 28,000.

Last year that torrent slowed to 24,000 in Nevada-a drop of 40%. Oregon and Colorado saw similar drop-offs.

"Throughout the '90s, inflows of California businesses and residents have been a key factor in the growth of the Mountain West and the Pacific Northwest," Mr. Zandi said.

For the first time since 1991, California is expected to gain more residents than it loses. The state will gain about 60,000 residents in 12 months that began July 1, according to a forecast by Regional Financial Associates.

Home building also has slowed this year in many western states. But several large cities remain overbuilt, judging by the gap between housing permits and new households formed, Mr. Zandi said.

Over three years ending with the second quarter, Las Vegas had issued building permits for 120,000 housing units. During that time, 75,000 new households formed. Measured by that gap, Las Vegas is more overbuilt than ever.

Other western cities also show large gaps. In Salt Lake City, 27,000 households were formed and 44,000 housing permits were issued in the three- year period that ended with the second quarter.

In Portland, 54,000 households were formed and 71,000 housing permits issued. In Denver, 51,000 households were formed and 71,000 building permits issued, Mr. Zandi estimated.

The overbuilding is also reflected in slowing home price growth. In Las Vegas, for example, house prices went up 2.5% on average through the first half of the year, compared with 4% nationally.

In cities such as Salt Lake City and Portland, homes are appreciating much faster than the national rate, but more slowly than in recent years. In Salt Lake City, for example, prices appreciated only 2.2% in the first half, compared with almost 9% for all of last year and 17% in 1994.

To get a sense of what a housing glut might look like, consider Phoenix.

In 1994 Phoenix was grossly overbuilt, with 100,000 permits issued for 60,000 new households formed. Prices barely rose in 1993 or 1994.

By the first half of this year, things had evened out considerably. In the three years that ended in the second quarter, 152,000 households were formed, according to an estimate by Regional Financial Associates. Some 153,000 housing permits were issued.

House prices rose 8% through the first half of the year.

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