Southern California's housing market continued to cool last month as Los Angeles County's home prices rose at their lowest rate in six years while San Diego County's price declines worsened, data released Wednesday showed.
The data were the latest indication that buyers are in no hurry to pay the high prices that attracted bidding wars in the last two years.
"It's clear that a price correction is underway, but it's a matter of magnitude," said Andrew LePage, an analyst with La Jolla-based research firm DataQuick Information Systems, which provided the data. "We're not sure at what point demand will respond and start to pick up again."
Fewer buyers entered the market in August compared with a year earlier, eroding sales to levels not seen in a decade. In Los Angeles County, 9,193 homes were sold last month, the fewest since August 1997 and a 21% drop from year-earlier volumes, according to DataQuick. August was the county's ninth straight month of plunging year-over-year sales rates.
Slow sales pulled down price growth in Los Angeles County, where the median price rose 4.7% year over year to $517,000 in August. That was the slowest rate of appreciation since the housing boom began six years ago and was below the county's historical average growth rate of 7%, according to DataQuick.
In San Diego County, the situation was worse for sales and prices. Considered a bellwether because it was the first Southland housing market to heat up -- and now to cool down -- the region saw a 32% plunge in sales and a 2.2% decline in home prices compared with a year earlier. At $482,000, San Diego's median price for all types of housing is now back to where it was in April 2005.
It was the third straight month that San Diego prices depreciated and the 26th consecutive month that sales dropped from year-earlier levels.
Data for other Southland counties will be released next week.
"We're now experiencing a 'payback' in demand for homeownership, following the surge that pulled demand forward into the boom years," David Seiders, chief economist for the National Assn. of Home Builders, testified before a Senate committee Wednesday.
The decelerating housing market may already be pushing up foreclosure rates. In the second quarter, the percentage of mortgages that started the foreclosure process rose to 0.43%, according to a quarterly survey released Wednesday by the Mortgage Bankers Assn. That was up from 0.39% in the second quarter of 2005.
