Home Sales Tumble 18.1% in Southland : Housing: The February figures raise fears that the area’s fragile economic recovery may be in jeopardy.

Sales of new and existing homes in Southern California plunged 18.1% in February compared to the same month in 1994, raising fears that Southern California’s fragile economic recovery could be in jeopardy.

It was the second monthly drop in a row in the six counties of Southern California. According to TRW REDI Property Data, a real estate information company, the decline was attributed mainly to bad weather and high interest rates.

“It seems like it’s getting progressively worse,” said TRW market analyst Nima Nattagh.

In February, 10,448 homes closed escrow, down from 12,764 a year earlier, TRW reported. Sales in January had fallen 11.3% over a year earlier.

The average price of a home in Southern California dropped to $198,621 in February from $203,878 a year earlier, TRW reported.

“What remains to be seen is whether the downward trend continues over the course of the next couple of months,” Nattagh said. “If it does, the brief recovery of 1994 may be proven to be not sustainable.”

California’s housing market has traditionally played a leading role in the state’s economic recoveries, though it has been less of a factor this time around. What’s more, not all analysts agreed that the winter sales slump signals a return to recession.

“There’s sufficient momentum in other industries we’re seeing to conclude that the recovery is going to continue, whether real estate has another bad month or not,” said Adrian Sanchez, regional economist at First Interstate Bancorp in Los Angeles.

Ted Gibson, chief economist with the state Department of Finance, cautioned against interpreting the sales drop too broadly. For one thing, the first quarter of 1994 saw unusually strong home sales, he said.

Moreover, he added, “There is often . . . a logical response on the part of potential buyers when interest rates are falling, to postpone purchases to see if they can get better rates” later on. Long-term mortgage rates peaked last November and have been declining gradually since then, he said.

Other economists argued that the decline in February home sales reflected bad weather in December and January, that the bad weather most affected discretionary buyers and that sales should bounce back in April or May as mortgage rates fall and the weather improves.

Dataquick Information Systems, another real estate reporting service, reported that more people in late February and early March requested information about opening escrow, said John Karevoll, a financial editor there. An increase in escrow openings now would translate into a surge in sales in April and May, he added.

TRW showed that while February sales were down in all six counties of Southern California, the worst declines came in San Diego and Orange counties because they have a greater proportion of higher-priced homes. This trade-up market has been particularly hard hit by the interest rate increases.

Orange County saw sales fall 27.4% to 1,659 homes from 2,286 in 1994, and San Diego reported sales off 34.1% to 1,229 from 1,865 the year before.

Home sales have been falling for four months in Orange County and for seven months in San Diego, Nattagh said.

The average price of an Orange County home fell to $235,689 from $237,706. In San Diego, the average home price fell to $201,511 from $209,709.

In Los Angeles, sales were up slightly in January and fell 12.3% in February, to 4,441 from 5,061 the year before. The average price of a Los Angeles County house was $215,877 in February, down from $227,223 in 1994, TRW reported.

Realtors and others doubted the decline in home sales had much to do with the uncertainty surrounding Orange County’s financial mess.

“What I initially thought was Orange County being (affected) by the bankruptcy I’m seeing all over Southern California,” said Richard Cosner, president of Prudential California Realty in Mission Viejo. Instead, the sales drop “may be just a broader reaction with regard to an increase in interest rates in the past year,” he said.