THE ECONOMY : October Home Prices Fall 3%, Sales Rise

Southern California home prices dropped 3% in October to an average of $202,913--from $208,215 in September--according to a report released Thursday.

But October’s prices were virtually unchanged from the same period last year, said TRW Real Estate Information Services, which prepared the report.

Largely because of the softening prices, home sales in the five-county region--Los Angeles, Orange, Riverside, San Bernardino and San Diego counties--jumped 10% in October from September.

The biggest decline came in Orange County, where average sales prices last month dropped 9.1% to $236,421 from $260,180 in October, 1989. Most of that decline came from the 11% plunge in the average resale price in the county--$229,221 in October, from $258,389 a year earlier and the lowest level since December, 1988.

The combined average sales price of new and resale homes in Los Angeles County dropped 0.8% over the 12-month period. San Bernardino, Riverside and San Diego counties showed slight to moderate price appreciation during the period, ranging from 0.6% in San Diego County to 7.1% in Riverside County.

Although sales for the region remained well below year-earlier levels, real estate experts said the one-month sales hike, coupled with softer prices, may signal at least a small resurgence of the region’s residential market.

New-home prices throughout the Southland have been falling for several months as builders, desperate to reduce their building inventories, have been offering inducements ranging from free back yard landscaping and cash rebates to new luxury cars.

And now realtors are starting to report significant rollbacks of resale prices as well.

“We’ve seen listed prices come down $50,000 even $60,000 in the past month or so,” said Martha Jansen, owner of Century 21 offices in Fullerton and Yorba Linda.

With the situation in the Mideast still unsettled and a growing number of economists warning of a recession, some industry analysts had expected October sales to be as bad or worse than September, said Ed Setzer, vice president of the TRW real estate unit. “Frankly, we’re a bit surprised at the resiliency and vitality of the Southern California housing market.”

But one industry specialist cautioned that one month’s figures don’t necessarily mean that the region’s housing market is on the rebound.

“There are a lot of buyers out there, but a lot of them are still waiting to see if we’ve hit bottom,” said Milton E. Naylor, the Irvine-based executive vice president of Grubb & Ellis Residential Brokerage Services’ Pacific Southwest Region.

Clive Hoffman, director of the Mortgage Institute of California, said he does not see any signs of a significant recovery in home sales.

Still, declining prices--especially in costly Orange County--are a welcome occurence because they will break down the buyer resistence that has helped stall the real estate market, Naylor said.

A total of 21,208 new and resale homes and condominiums changed hands during October in the five-county area tracked by TRW. That compares to 19,331 sales recorded in September, but was still 21% below the 26,671 sales that closed in October, 1989.

Sales dropped from October to October in all five counties, with Orange County posting the best comparison, as tumbling prices pulled some shoppers back into the market. In all, 3,582 homes and condominiums were sold in the county last month, down only 0.3% from 3,593 sales a year earlier.