After a surge in June largely attributed to an ample supply of distressed properties, Los Angeles County home sales slowed sharply in July as brokers said that cheap housing stock temporarily ran out.

However, median prices continued to creep upward as midpriced homes in some inland areas drew multiple bids.

There were 3,240 homes sold in July, a decline of 33 percent compared with June, after adjusting for the number of selling days each month recorded by HomeData of Hicksville, N.Y. Volume was off 11 percent compared with July 2008.

The median price for an existing home rose 4 percent since June to $332,000, marking the third straight month that prices have climbed since hitting a bottom of $303,000 in April. Prices were off 21 percent since the same time last year.

Meanwhile, county condos sales fell 34 percent in July compared with June as just 1,222 units changed hands. Prices, which had been generally rising since February, fell 3 percent since June to $300,000.

Brokers and other real estate experts said the surge of home sales in June when 6,016 homes moved during a five-week period and the subsequent July sales slump could be attributed to the bank foreclosure process.

Banks usually process foreclosed properties together, putting them on the market at the same time. With May and June historically a prime selling period, many banks flooded the market, said Abraham Park, an assistant professor and real estate economist at Pepperdine University.

“My guess is that June had a big load of trustee (bank) sales, at least half or more of all sales,” Park said. “The banks tend to sell them in bunches, and June is a popular month for that.”

Now, with the June consignment of homes sold and banks still assembling their next packages of properties, there was a scarcity in July, said Frank Crandall, chief executive of KW VIP Properties in Santa Clarita.

“We’re running out of inventory,” Crandall said. “It seems (the banks) don’t have enough staff to process the paperwork. I think the market is on the right track, it will just take time for the banks to catch up.”

However, even with sales down, the median price was able to continue rising as homes buyers who have sat on the sidelines reacted to prices that are often close to 50 percent off the peak of the boom in mid-2007.

“For anything under $500,000, we are getting multiple offers for properties in the San Fernando Valley and in Santa Clarita,” said Tom Carnahan, owner of Carnahan & Associates in Woodland Hills. “And it’s not only short sales it’s also traditional sellers who are pricing their homes at what the market can bear.”

However, that demand has not extended to higher-priced homes, which continue to suffer from a lack of credit from skittish lenders.

For most of the country, mortgages under $417,000 are considered “confirming” or standard loans. Because California is classified as a high-price area, loans as high as $730,000 are conforming, but Carnahan said many lenders are simply refusing to make larger loans available.

“The part of the market that’s struggling is between $550,000 and $850,000,” Carnahan said.

In addition to financing, homes in that range confront a lack of buyers as the normal cycle of trading up has been halted by falling values and the recession, he said.

Split Markets

Meanwhile, home sales also are continuing strongly in some working-class neighborhoods.

Ferrel Solano, an agent with Excel Real Estate in Maywood, sells homes in Compton and South Los Angeles, two areas that saw higher sales in July compared with the previous month. He said most of his buyers are young couples or single parents who can take advantage of a special $8,000 tax credit for first-time buyers. The credit was included in the federal stimulus package.

Indeed, the tax credit has even spurred some bidding wars. Solano said he recently put in a $155,000 bid for a home listed at $119,000, but worried another offer might go higher. Mortgage payments at that level are less than a comparable apartment rent, he noted.

Meanwhile, the question remains when the home market will hit bottom.

Even though county home prices have gained 9.6 percent in the last three months, many believe the uptick is temporary. Real estate data supplier First American CoreLogic issued a report a few weeks ago that showed 9.5 percent of all mortgages in the state and 9.9 percent in the county were delinquent and in default a huge number that indicates more foreclosures will be coming on the market.

Park of Pepperdine believes that foreclosures will dominate the local market for as long as the next two to three years.

“Homes prices are still falling in most regions, unemployment is rising and there’s still a massive oversupply of housing,” he said. “The freefall of housing prices is over, but I don’t see that as the end of price declines. There will be these ups and down, but we still have a ways to go down.”

Also, Park noted that adjustable rate mortgages were popular until about 2006 and they usually ratchet up the interest rates after five years. So he forecasts continued foreclosures though 2011. He advises would-be buyers or investors to wait another year of two before entering the market.

“It’s still a good time to buy after the market has cleared and hit bottom,” he said. “If you buy now, you shouldn’t plan on selling for the next five to 10 years.”