Southern California homes sales at 14-year low

SAN FRANCISCO, July 17 (Reuters) - June home sales in southern California fell to their lowest in 14 years and the slump hit the region's most affordable markets east of Los Angeles hardest, according to a report released on Tuesday.

The report by DataQuick Information Systems said a total of 20,166 new and resale homes were sold in June in Los Angeles, Orange, San Diego, Riverside, San Bernardino and Ventura counties last month, marking a rise of 1.5 percent from the prior month and a decline of 36.2 percent from a year earlier.

The region's home sales have been declining from year-earlier levels since October 2005, raising concerns that the downward trend could cause the broad California economy to suffer.

The median price paid last month for a home in the region was $502,000, down 0.6 percent from May but up 2.4 percent from a year earlier, according to DataQuick, a La Jolla, California-based real estate information service.

Housing markets across the region, California's most populous area, have been cooling after a boom in home sales and prices early in the decade propelled by high demand, low mortgage rates and easy access to financing, including loans to so-called "subprime" borrowers with patchy credit histories.

Defaults by subprime borrowers have been soaring, adding to the inventory of homes for sale across southern California, but most prominently in Riverside and San Bernardino counties east of Los Angeles.

The increased inventory of properties listed for sale is weighing on home prices and making potential buyers reluctant to purchase real estate in an uncertain market.

Investors looking for a fast profit are increasingly rare in most markets in southern California, said Marshall Prentice, DataQuick's president.

"Today's buyers and sellers really need to move for one reason or another, not because they want a guest room or bigger yard," Prentice said. "The exception seems to be high-end markets, most of which are doing pretty well."

"We're probably pretty close to the 'floor' level of buying and selling, meaning that most of the activity is basic and not discretionary," Prentice said.

Riverside and San Bernardino counties, which have the lowest county-level median home prices in southern California, posted the region's steepest drops in home sales in June from year earlier levels: 47.2 percent and 50.1 percent, respectively, according to DataQuick.

"These two counties had absorbed a lot of spillover from San Diego, Orange and Los Angeles counties," said DataQuick analyst John Karevoll. "When things slow down they slow down more in 'spillover' areas."