Booming O.C. Housing Market Begins to Slow

Orange County’s surging housing market showed signs of cooling last month, according to a report released Monday on home prices and sales.

The median price of a home in the county fell to $227,000 in September, down $3,000 from the previous month. Home prices were still 9.7% above prices a year ago, but it was the first time in almost a year that they haven’t shot up at double-digit rates, according to Acxiom/DataQuick Information Services, which compiled the report.

A sudden leap in mortgage rates last week could cloud the market, but some analysts said they expect housing demand to remain strong. They point out that mortgage rates are still relatively low, despite a half-percentage point gain late last week that offset most of the declines in rates over the last two months.

“The change we’ve seen in the last week isn’t enough to change the factors that are affecting home sales,” said Earl Peattie, president of Mortgage News Co. of Morro Bay, Calif., who has compiled a weekly report on Southland mortgage rates for more than 12 years.

He added that rates remain at some of the lowest levels in 20 years, and he believes those who will be affected are people with marginal credit.

In the last couple of years, partly because of income growth, looser credit and lower mortgage rates in general, the housing market is not as sensitive to changes as in the past, Peattie said.

Currently, rates remain below 7%, analysts said.

Some analysts noted that the rate increase could have an unintended benefit: prompting undecided people to jump into the market, realizing that rates are as cheap as they are likely to be.

A total of 4,331 homes sold in September, up 9.6% from the same month last year. It also marked the 16th consecutive month that prices showed a year-over-year increase.