Southern California home market cools; prices remain flat | Armonk Real Estate

The region’s median home price in July remained flat from a month earlier, at $385,000, real estate firm DataQuick said Wednesday. The figures followed a record-setting June, when the median price rose 4.6% over the previous month and 28% year-over-year, the highest percentage since DataQuick started tracking the statistic in 1989.

The cooling off came with a surge in the number of sales to an eight-year high, indicating a growing supply of homes that could steady the market after this year’s frenzy. Rising mortgage rates may also have propelled more buyers to close deals, fearful that rates could climb higher, the San Diego research firm said.

“We are slowly moving toward a normalized market,” said Stuart Gabriel, director of UCLA‘s Ziman Center for Real Estate.

The market nonetheless remained strong, with the median price up 25.8% from July 2012.

Prices have risen at a breakneck pace this year with an improving economy, a short supply of homes and heavy investor demand. The gains have frustrated many would-be buyers who found themselves on the losing end of bidding wars and raised questions about whether the market is getting overheated.

Many economists say the increases should moderate as the inventory crunch loosens. Rising prices, many have predicted, will spur new-home construction and lure more sellers into the market.

Rising mortgage rates should also eventually help cool the market. But rate increases could also spur more sales and price increases in the short term, as buyers look to get into the market before rates go up further. Mortgage rates have risen about 1 percentage point since the beginning of May.

Inventory has increased in all six Southern California counties last month from June, according to Realtor.com. Los Angeles County, for instance, saw 7.8% more home listings in July than a month earlier. Orange County inventory rose 8.4% last month.