Bad news came in threes for the real estate industry Tuesday as two nationwide economic reports and one from California showed the housing slump is accelerating.

California home sales plunged nearly 30 percent last month compared with August 2006 and median prices dropped by almost 14 percent in the High Desert area and part of Santa Barbara County, the California Association of Realtors said Tuesday.

In the Bay Area, sales of existing homes dropped 26.5 percent in the same time period, but, because of more sales at the higher end of the market, the median price of a single-family home actually rose 9.9 percent from August 2006, to $832,760. That was down about 1.1 percent from July’s median of $841,660.

The group defines the Bay Area as Alameda, Contra Costa, Marin, San Francisco, San Mateo, Santa Clara and Solano counties, omitting Sonoma and Napa.

For the entire state, the median price edged up 2 percent to $588,970. But analysts at the trade group pointed out that prices were weak in nine geographic regions and at the lower end of the market. The median price of an entry-level home - anything less $500,000 in California - dropped 5.1 percent in August to $349,360.

In addition, the inventory of unsold homes was 11.8 months in August, compared with 5.9 months in August 2006. The figure represents the number of months it would take to sell all the homes currently on the market.

“The credit crunch emerged as uncertainty about the extent of the subprime problem drove investors across the globe to turn off the tap of funds to lenders in mortgage and other credit market segments. With credit drying up, even qualified buyers were unable to receive funding for home purchases,” Leslie Appleton-Young, the trade group’s chief economist, said in a news release.

“We expect the impact of the credit crunch to play out over the next several months, and that it will continue to negatively impact sales,” she said.

Of the regions studied in the monthly report, Santa Barbara’s South Coast had the highest median price at $1,262,500; the High Desert had the lowest at $287,390.

Bad news for homeowners also came from the National Association of Realtors, which said sales of existing homes fell for a sixth straight month in August, pushing activity to the lowest point in five years.

The group said that sales of existing single-family homes dropped by 4.3 percent in August, compared with July. Sales at a seasonally adjusted annual rate dropped to 5.5 million units, the slowest pace since August 2002.

The median price of an existing home - the point where half sold for more and half for less - edged up slightly in August to $224,500, an increase of 0.2 percent from August 2006. It marked the first annual price increase after a record 12 straight months of declining prices.

Meanwhile, a separate report on housing prices in 10 large cities done by Case-Shiller showed prices dropping a sharp 4.5 percent in July compared with July 2006. Economists said that report is probably a more accurate reflection of the downward pressure on prices that is being exerted by record high inventory levels.

“Another month of falling sales and rising inventories tells us the housing market is still a basket case,” said Joel Naroff, chief economist at Naroff Economic Advisors Inc. “It is going to take a long time to work off that imbalance and undoubtedly prices will have to fall a whole lot further.”

Some economists warned that even worse news could be ahead because of the financial market turbulence in August.

“August’s sales do not reflect the full impact of the credit crunch, which hit financial markets in mid-month, since most sales were financed with loans approved weeks beforehand,” said Patrick Newport, an economist at Global Insight.

Sales were down in all parts of the country in August, the Realtors said. The West saw the biggest drop, 9.8 percent, followed by declines of 5.2 percent in the Midwest, 2.7 percent in the South and 2 percent in the Northeast.

The fall in sales pushed the inventory of unsold homes to a record 4.58 million in August. That means it would take 10 months to exhaust the inventory of homes on the market at the August sales pace, also a record figure.

Source:

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/09/26/BU2VSDSF9.DTL&hw=real+estate&sn=005&sc=379