The region's housing market paused last month as home sales in Los Angeles and Orange counties declined from year-earlier levels, according to a report Wednesday.
But prices of all kinds of homes grew robustly in February, and analysts generally viewed the drop-off in sales--7% in Los Angeles County and 21% in Orange County--as a one-month blip partly attributed to low inventories. Although some brokers are reporting signs of slowing, most agreed that it will take two or three months of sales declines to indicate a trend.
"I really don't think that's an indication of any turnaround or downturn in the market," said John Karevoll, an analyst at DataQuick Information Systems Inc. who prepared the report.
After analyzing a wide range of trends in the monthly housing report, including the financing and housing mix, Karevoll said he expected sales numbers to bounce back. "Come next month, we'll be back to the [sales] levels we had a year ago," he said.
The report showed that the median price of homes sold in Los Angeles County last month rose 8% to $206,000 from a year earlier. In Orange County, the median price surged 14% to $286,000. The appreciation was broad-based, including condos as well as single-family houses. But new houses, which are in low supply, saw the biggest run-up in prices.
Analysts and brokers said buyer demand remains strong, but inventories are shrinking, pushing up home prices.
In Los Angeles County, the latest figures show a 5.2-month supply of previously owned homes on the market, down from 5.8 months a year earlier, according to the California Assn. of Realtors. In Orange County, there is only a 3.3-month inventory, down from 4.1 months a year earlier.
Moreover, there are few moderately priced new homes. Only 15 newly built houses priced at less than $500,000 were available on the Orange County market in December, according to Meyers Group, an Irvine housing research firm.
The tight supply could lead to a slowdown. The slowing economy and sagging stock market, which have dented consumer confidence, also could lead to a downturn.
Some analysts said they expect the housing market in Los Angeles and Orange counties to begin softening in the spring. "Given the decline of the stock market and the slowdown in the economy, one has to expect that this trend will slow down both sales and housing prices for the remainder of this year," said Anil Puri, dean of the School of Business and Economics at Cal State Fullerton.
Some brokers say they are seeing what may be early signs of a cooling market. "We're not going to see them selling as fast or getting record prices," said Mike Cocos, a manager at ERA North Orange County.
He noted that homes are on the market longer--what took three or four weeks to sell now is taking five or six weeks.
Even so, he said there's still significant desire for homes priced at $250,000 or more. Any home less than that is disappearing fast, he said, unless it needs repair.
The DataQuick report showed that 2,707 homes sold in Orange County last month, compared with 3,409 the previous February. In Los Angeles County, 6,532 homes were sold last month, versus 6,986 a year earlier.
The report covers home sales that closed in February, reflecting agreements between sellers and home buyers in the previous 30 to 60 days.
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Home sales in L.A. County fell last month from a year earlier, but median prices continued to rise.
Feb. '00: 6,986
Feb. '01: 6,532
Feb. '00: $191,000
Feb. '01: $206,000