Home sales have dropped sharply in two key areas of the country - Southern California and south Florida - according to reports from TRW Redi Property Data, a real estate information company.

Nationwide, August sales improved slightly, the report said, but the year is still expected to end with a decline from the 1994 level. TRW Redi puts the figure at about 12%.

"The current market downturn is not affecting sales of lower-priced homes," the TRW Redi report said. "Sales of homes priced at less than $100,000 were actually up by 5% in the first eight months." By contrast, homes of more than $400,000 showed a drop of 23.6% and those between $250,000 and $325,000 dropped 25.7%.

Six southern counties in California - Los Angeles, Orange, Riverside, San Bernadino, San Diego, and Ventura - showed a collective decline of 16% in the number of new and existing homes sold in the first eight months this year from the year-earlier level.

San Diego County led the pack with a drop of 24.8%, just ahead of Orange County with a plunge of 24.7%. TRW Redi said Southern California sales have now dropped for nine consecutive months.

California represents about a quarter of the national mortgage market, and the continuing slump there has dampened an otherwise brisk recovery for lenders.

In south Florida, the decline for the first eight months was 12%, to about 13,000 units, and was distributed about equally among the three counties - Broward, Dade, and Palm Beach. The drop represented the eighth consecutive monthly setback.

The decline was a bit sharper at 13.5% in Palm Beach, where the houses are relatively costly, than in the other, less expensive counties.

TRW Redi said builders were hit hardest, with sales of new homes dropping by 20%. The number of units sold so far this year was just over 11,000.

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