The bubble may not have burst, but it’s definitely leaking.

While median home prices in December were up 18 percent to $525,000 in Los Angeles County from December the prior year, unit sales were down 6.2 percent, according to HomeData Corp., a Melville, N.Y.-based company that tracks housing data.

At the same time, December’s median price remained the same as the previous month, after a slight up-tick from $520,000 in October but still below a yearly high of $528,000 in September.

The plateau is a notable conclusion to a historic year in the housing market in which year-over-year median price increases have frequently been above 20 percent in Los Angeles County. Overall, the median-priced California home climbed 18 percent in 2005 to $523,150, according to the California Association of Realtors.

“Fourth-quarter sales numbers were below expectations,” acknowledged Leslie Appleton-Young, chief economist for the association. “(But) there are a lot of things exogenous to the market that you can point to in addition to rising rates. There was plummeting consumer confidence after Hurricane Katrina and that very (high) average sale price.”

So while it’s clear that the local housing market reached a plateau at the end of 2005, the bigger question remains: Will prices drop this year? Appleton-Young and some other economists continue to predict a “soft landing.”

But the evidence so far is mixed.

The Realtors association’s Unsold Inventory Index, or the amount of time it would take to sell all of the houses on the market, was up to 3.9 months in November, from 2.8 months in the year-earlier period. That was the latest data available.

The average index for 2005 was 3.3 months, up from 2.8 in 2004. In addition, inventory levels are expected to continue to rise, especially if mortgage interest rates continue climbing. Already, the Realtors association’s Affordability Index fell in October to 15 percent, four points lower than the year-earlier period.

Even so, economists such as Dr. Gary Painter at USC’s Lusk Center for Real Estate, which has been notable in its critique of a potential market bust, believe that current data by historical standards portends nothing more than a soft landing unless the economy falls apart, triggering wide job losses.

“Certainly the interest rate environment isn’t as favorable as it used to be as we’re coming off of two to three years of great sales,” said Painter. “(But) right now there’s still not a lot of inventory out there and without a lot of inventory you won’t see a price decline. Still, we’re not going to see the double-digit price increase or people getting above list price.”

One thing expected to bolster the market: continued demand for homes by the region’s still-growing population.

The California Building Industry Association projects that 185,000 to 205,000 new units will be permitted this year. That’s close to the 193,652 permits issued in the first 11 months of 2005.

“We are still in a housing crisis,” said Holly Schroeder, Chief Executive of the Building Industry Association Greater Los Angeles/Ventura Chapter. “We’ve seen increases in permitting, but it’s below the overall needs.”

According to the association, the homebuilding industry has historically met about 80 percent of need, causing prices to continue climbing.

“I think in general we see a little bit of a simmering down, but certainly we see such a demand that the talk of a bubble that pops and creates a tremendous drop in value doesn’t seem to be in line with the tremendous demand that we see,” she said.

However, two upscale neighborhoods Calabasas and Malibu, where there have been big price gains saw a substantial slowdown in sales last month. In Calabasas, unit sales were down 26 percent while prices just edged up 9.1 percent, about half the 18 percent countywide average.

Ron Aaron, an agent with White House Properties Inc. in Calabasas, said the slow down has not resulted in a big uptick in inventory though he acknowledged it could be the result of homeowners not putting their homes on the slowing market.

There were 3,400 homes in the Valley for sale in October, a number that climbed to nearly 4,000 before dropping back to 3,400 in December. “I don’t know if it’s people not wanting to list but I thought the inventory would continue to climb before the end of the year,” he said.

Even so, Aaron said prices are going down on his listings. One home listed for $1,625,000 sold for $1,450,000. Another listed for $760,000 and sold for $725,000. “People don’t come down that much unless they’ve over-priced (the listing),” he said.

The usually hot Malibu market posted some of the worst December numbers in the county, although only a handful of home sell in Malibu, creating a market that can vary widely. Still, unit sales were down 31 percent from the year prior and prices were down 7.7 percent.

“We had a lot of people coming on the market so our inventory is up. Our beach market is totally strong, but on our upper end land side, we’ve seen more inventory and price reductions and longer marketing times,” said Gracee Arthur of Gracee’s Malibu Estates. “It easily can take three to six months now to sell properties over $3 million on the land side.”