Small Home-Sales Decline May Mean Worst Is Over : Real estate: Despite the slow drop, the county did not display the strength that many other markets have shown.

Home sales in Orange County continued dropping in February, with the number of closed escrows down 0.9% from January and off 34.4% from a year ago, the California Assn. of Realtors reported Monday.

The modest drop in sales of existing homes from January was the smallest decline in sales locally since August. That showing has some real estate officials saying the slump that has devastated the industry has hit bottom and the worst is over.

Still, Orange County, one of the nation’s hottest real estate markets in the 1980s, did not display the strength that many others have. Two reports released Monday show that statewide and national sales increased substantially in February.

In Orange County, the slowing sales decline was bolstered by renewed signs of price stability in the resale market. The $236,720 median price of a single-family resale home in the county was down only 2.7% from $243,285 in February, 1990, and was virtually unchanged from January’s $236,730.

The flatness in prices could be a precursor to increasing sales, real estate experts said. Already, there has been a reported increase in new home sales, which has lowered the inventory, thus bolstering demand and prices of all homes for sale in the county.

“It is going to be a gradual process of bringing the inventory (of unsold homes) down, but things look quite good for a rebound to begin” in the resale market, said Leslie Appleton-Young, chief economist for the realtors’ association.

Interest rates are giving the market a major push, she said, and remain at the lowest level in almost four years. According to the Federal Home Loan Mortgage Corp., fixed mortgage rates dropped from an average of 9.62% in January to 9.33% in February. Adjustable rates fell to 7.59% from 7.74% in January.

Appleton-Young said she now expects sales levels to climb back up to 1990 levels by mid-summer. That would be a welcome change in Orange County, where the sales pace, as tracked by the state trade group, has dropped every month since August. The total decline over the six-month period has been 47.1%.

But the association uses escrow closings to compile its monthly tally, and that means it is actually measuring sales contracts that were opened two to three months earlier. Thus, February’s closings reflect sales activity in November and December, traditionally among the slowest months of the years in the residential resale market.

And that seasonal trend was compounded by consumers’ skittishness over the general economy and their reluctance to make major purchases with the situation in the Persian Gulf still undecided.

“Deals are starting to come together,” said James Righeimer, a broker in Fountain Valley and president of the Huntington Beach-Fountain Valley Board of Realtors. “In our office last month, with 70 agents, we had 47 sales opened. This month, as of Friday, we already hit 48. We’ll probably hit 57 to 60 sales openings for the whole month.”

That increased activity, he said, has been caused by the relatively low interest rates, a resumption of consumer confidence and sellers’ willingness to price their homes competitively in a slow market.

“There are a lot more transactions going in the the last two months, more listings, more offers being made and more sales contracts being signed, than in a long time,” Righeimer said.

O.C. Home Resales The sales pace in Orange County’s resale housing market continued to drop in Febuary, butit was the smallest decline in six months and prices remained flat. Median Price: ‘91: $236,720 Monthly Sales Volume: ‘91:-0.9% Source: California Assn. of Realtors