Average Price of Valley House Falls 4% From Record High

The average resale price of a single-family house in the San Fernando Valley in July fell 4% from a record high the previous month to $295,800, the San Fernando Valley Board of Realtors said Monday.

Despite the slight drop from June--when the average price of a single-family home hit $308,100 in the area, topping $300,000 for the first time--the July figure still represents an 11.5% increase from the year-earlier level of $265,300, the board said.

Sales of single-family homes continued to decline despite a drop in mortgage interest rates last month, to 1,171 units in July, down 3.1% from 1,209 the previous month and down 21.7% from 1,495 a year earlier. Sales had declined 10% from May to June.

Meanwhile, the average resale price of a condominium climbed 5% from June, to $150,600 from $143,400, and was up 13.2% from $133,000 a year earlier.

Resales of condominiums in the Valley totaled 414 units, up 12.2% from 369 in June but down 5.9% from 440 a year earlier.

The slowdown in house sales apparently contributed to an increased backlog of single-family houses on the market last month. There were 8,715 houses listed for sale in July--2,927 of them new offerings. The board said the complete inventory of 10,347 houses and condominiums for sale in July would take 6 1/2 months to sell at present sales rates. The inventory of 6,997 homes in July, 1988, would have taken only 3.6 months to sell, the board said.

The pace of sales apparently drew little support from the recent downturn in mortgage rates at local banks and savings and loans. Fixed rates on conventional, 30-year mortgages ranged from 9.75% to 10.8% in July, down from 10.2% to 11% in late June.

“Interest rates have come down,” said Jim Link, the board’s executive vice president. “We’re a little surprised that sales for the month did not pick up when interest rates were right around the 10% level and in some cases lower.”

Link said he believed that the gradual buildup of available houses, which began when prices and sales were higher, encouraged buyers in July to take more time than usual to select a house.

“There’s plenty of people out there hunting for housing,” Buddy Bernard, president of the Valley board, said in a statement. “I think it’s just taking time for them to sort through the widest selection offered in years.”

Link said it would take lower prices to reduce the backlog of houses on the market. “I think that sellers are going to realize that they are going to have to consider a price lower than they thought they were going to get,” he said.