O.C. Home Sales Slump Continues With 17% Drop in June : Real estate: Analysts blame the sluggish economy and county bankruptcy crisis. Transactions fell 39.8% in April and 28% in May.

Sales of new and existing homes in Orange County fell nearly 17% in June, a signal that the local housing market will remain sluggish the rest of the year, analysts said.

The drop represents the eighth straight monthly slide in home sales in Orange County, according to TRW-REDI Property Data, a data company in Riverside.

Analysts said lingering effects of Orange County’s bankruptcy filing Dec. 6 and a sluggish local economy caused June home sales to fall below sales in the previous June. Home sales in Orange County fell 39.8% in April and 28% in May.

“Obviously, the June rate is better than last month but still declining,” said Nima Nattagh, an analyst with TRW-REDI.

Still, the Federal Reserve Board’s decision Thursday to cut interest rates for the first time in three years could help boost home sales, analysts said. A rate cut usually signals a trend, and some economists are betting the Fed will cut interest rates again before the end of summer.

“Could be a little bit of psychological help for our market,” said Walter Hahn, director of real estate consulting for E&Y; Kenneth Leventhal Real Estate Group in Newport Beach. “It’ll be an indicator to a lot of people that the Fed is going to be cutting rates before the end of the year and that could help our home sales.”

Hahn cautioned, however, that “continued turmoil about the bankruptcy” could keep Orange County home buyers on the sidelines for some time.

A total of 2,986 homes were sold in Orange County during June, typically a strong month for home sales, compared to 3,588 the previous June.

“This doesn’t mean anything good for Orange County,” said Jason Hartman, a realtor with RE/MAX in Irvine. “Things have picked up a little in the last few weeks but not as good as it needs to be.”

Data was not available yet for Los Angeles and San Diego counties, according to TRW.

Home sales remain stagnant, in part, because of a large number of Californians who owe more on their homes than their homes are worth, TRW said.

A TRW report released this week showed that nearly 5% of all Californians have homes worth less than their outstanding mortgage balances. An estimated 3.1% of Orange County residents have negative equity.

* SALES BY ZIP CODE, D6