Home prices in Southern California held steady in February for the first time in nearly a year, figures released Tuesday show, as low prices brought buyers back into the market.
At the same time, home construction rose nationwide last month, helping spark a rally on Wall Street.
Experts say it's not clear whether prices have hit bottom, but they are now low enough that thousands of buyers are emerging as the traditional spring home-buying season begins.
"This feels like an excellent time to buy, and we're in steady jobs," said Rick Asavis, 47, who recently bought a new town house in Sylmar. Asavis and his wife, Karen, 50, were checking out their unit in the KB Home development Saturday to make final interior decorating decisions before moving in later this month.
The Asavises' home purchase was among the 4,590 in Los Angeles County in February -- a 32% increase over the same month last year -- as buyers were lured by low prices and a sense that even if the market continues to fall, houses have become cheap enough to make the investment worthwhile.
The increased sales came as developers started construction at an annualized rate of 583,000 homes in February -- 22% more than in the previous month, the federal government reported Tuesday. The increase was far more than economists had predicted, and the news was an important driver of a jump of nearly 179 points in the Dow Jones industrial average.
In Southern California, the number of homes sold last month in the six-county region soared 41% from a year earlier, to a total of 15,231. The median price remained at January's level -- $250,000.
Yale University economist Robert Shiller said if prices held up for two more months, it could be a sign that the market was stabilizing. Still, it's too soon to predict the end of the housing crisis, he said, because prices nationwide have further to fall.
"The best forecast is an average of recent prices, not the latest month alone," Shiller told Times reporters and editors Tuesday.
The region experienced a similar leveling-off last year, when the median held steady at $385,000 from March to April and then started falling again.
Prices fell so far that median-priced houses in Southern California are selling for half of what buyers were paying at the market's peak in 2007, according to MDA DataQuick. Those low prices, along with low interest rates, have boosted sales.
"A friend bought here a year ago for $415,000," Asavis said of the KB Home development in Sylmar, noting that he and his wife were able to buy their three-bedroom unit for $342,000 after another buyer backed out. Rick Asavis, a union air-conditioning installer, said he was confident that he wouldn't be laid off despite the economic downturn. Karen Asavis, a sales representative for a gift wholesaler, said she believed her job was also safe.
Not surprisingly, home purchases have increased the most where prices have sunk the lowest -- mainly mid- to low-priced inland areas hit hard by foreclosures. In February, foreclosures constituted 56% of all home sales.
In San Bernardino County, the number of homes sold was up 87% over February 2008.
Stuart Gabriel, director of UCLA's Ziman Center for Real Estate, said prices had fallen enough in these areas that "even with the abundance of risk in purchasing a home now" with rising unemployment and falling home prices, "households and investors believe they're compensated for taking on that risk by the lower price levels."
Home sales are still frozen in high-priced areas. Beverly Hills, Santa Monica, Brentwood, La Canada Flintridge, Rancho Palos Verdes and Redondo Beach were among the areas posting far-below-average home sales totals in February, according to DataQuick.
Those areas have had fewer foreclosures, and wealthy sellers can typically afford to keep houses on the market longer at high asking prices. But bigger price declines at the high end could be on the way, as high- income professionals such as lawyers and those in the financial sector now face job losses, Gabriel said. High-end sellers may also cut their prices when they either tire of holding out or can no longer afford to do so.
"These market segments don't all move in the same way at the same time. In the Westside and other more expensive areas, there might be a delay or lag" in price declines, he said.
Stephanie Vitacco, a Woodland Hills real estate agent, said the owner of a house she listed this year in the $2-million range had declined a $4-million offer for his property in 2007. This year he was unable to sell it and took it off the market, she said. But owners of similarly priced homes may have to sell, and when they do, Vitacco said, prices in that segment will see the same steep declines.
"The higher end has been a little insulated, but they're starting to feel it. Their businesses are suffering," Vitacco said.