HEADLINE: Average price of new O.C. house up 10%;Real Estate: Sales are down 27% from a year ago as homebuyers adopt a wait-and-see attitude.

More would-be homebuyers are shying away from the steep cost of
buying a new house in Orange County.

At least for now.

The average price of a new, detached house rose 10 percent to
$ 481,000 in the second quarter of 2000 compared with the same
period a year earlier, according to The Meyers Group, an Irvine
company that monitors the new-home market. The average price for an
attached house increased 25 percent to $ 247,429.

As prices rose, sales fell 27 percent to 1,810.

Some prospective buyers may have decided they don't want to pay
what builders are asking, prompting the market to temporarily
plateau. If the economy remains healthy, anxious house-hunters
likely will grow accustomed to the higher prices and eventually
buy, said John Burns, senior managing director. "Buyers are
adopting a wait-and-see attitude," Burns said.

Such pauses have occurred repeatedly since the real estate
market began to recover in 1994, he said.

Builders are accustomed to the stops and starts.

Fieldstone Communities Inc., for example, is selling houses at
four projects in Orange County, one each in Fullerton and Yorba
Linda and two in Irvine. Prices range from the mid-$ 300,000s to the
high $ 500,000s.

Sales are down slightly from a year ago, with the northern
locations showing greater weakness.

Tight supply, rising prices and the market's tendency to ebb
and flow all are factors, said Frank Foster, Fieldstone's
president. But the fundamentals remain strong.

"If I had to guess I'd say we'll see continued upward
pressure on prices for some time," Foster said.

The chance that prices will continue to climb helped persuade
Alan and Claudette Knight to buy a home in May in Ladera Ranch.

The couple paid just under $ 400,000 for the house, their first.

To Alan Knight, in particular, who is from Georgia, the prices
were a shock.

"I never dreamed I would spend $ 400,000 on a house," he said.

But Knight, a science teacher, worried more that prices would
continue to rise, and eventually move out of his reach. He believes
it is unlikely that prices will drop in the near future.

He's probably right, according to The Meyers Group.

For one, supply remains limited. The county has about seven
weeks worth of houses available for sale, the company said. That's
more than a year ago, but still short of what would be considered a
balanced housing market. Job and population growth also are strong.

New-home prices likely will appreciate 8 percent this year and
4.3 percent in 2001 as job growth slows and affordability worsens,
the company said.

jhieger@notes.freedom.com
Call: (714) 796-7929

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