Low interest rates and high demand among investors paying cash pushed Orange County home sales to their highest level for a January in seven years, DataQuick Information Systems reported Wednesday.

Orange County home sellers closed 2,431 transactions in January, up 29.9 percent from a year earlier, the La Jolla-based housing tracker reported.

That’s the most sales for the month since January 2006.

In addition, the median home price – or price at the midpoint of all sales – was $460,000. That’s up 17.3 percent to a five-year high for a January. It’s also the second-highest amount for any month since home prices crashed in 2008.

The report shows continued momentum behind a housing recovery that gained traction in mid-2012.

“The numbers do not lie,” said housing consultant Pat Veling of Real Data Strategies in Brea. “The recovery is real and not a statistical blip.”

Local industry observers cautioned, however, that median-price gains are due only partially to rising home values. Another factor: Higher-priced and luxury homes now make up a higher proportion of the sales, boosting the median home price.

For example, sales of homes in the $600,000-plus move-up market doubled in Orange County last month from year-ago levels, DataQuick figures show. At the same time, sales of the cheapest homes – priced at $400,000 and below – decreased 9.5 percent.

Prices and sales increased across the six-county Southern California region, DataQuick reported, driven by investor and cash buying.

Absentee buyers, consisting mainly of investors and second-home purchasers, bought a record 30.7 percent of the homes in the region, DataQuick reported. Buyers paid all cash for 34.9 percent of the Southern California homes sold last month.

Industry observers noted also that the current hot market could cool if the number of homes for sale rises, either because lenders release more of the foreclosures for sale or more owners take advantage of rising prices.

Underwater homeowners, for instance, may list their homes for sale as values climb above their housing debts.

Orange County had fewer than 3,300 homes for sale by the end of January, down from 7,800 a year earlier, according to Steve Thomas of ReportsOnHousing.com.

“The lack of inventory is running this whole market now,” said Gary Legrand, president and CEO of Surterre Properties.

Broker Grant Bixby of Coldwell Banker Previews International said properties he’s been listing in east Costa Mesa receive multiple offers within days of coming on the market; a year ago, buyers worried about prices dropping further.

“People now are going, ‘Oops, we missed the bottom,’ and people aren’t being so selective,” Bixby said. “Every available house is just getting zapped up quickly because people don’t want to miss another run-up in appreciation.”

In January, home sales and prices both dipped slightly from December levels, which is typical. January usually is the slowest month of the year, reflecting deals reached during the holiday season.

But Westminster agent Dick Lobin of Century 21 Olympic Team expects the market to be booming from April though September.

“In the Asian-dominated area that I work in, all cash transactions still represent a high percentage of the total number of transactions, over half for me,” Lobin said.

Phil Immel, a broker with Prudential California Realty in Monarch Beach, said the luxury markets “are red hot.”

“Sales of $1 million to $20 million saw the highest numbers of sales in nearly a decade, and at higher prices,” Immel said. “Are some sellers delusional? Yes, (but) not all. They read the headlines and think that bad market is over and their prized possession is worth 20 percent more than reality. Expect overpriced listings at all price levels this year.”

Legrand noted that the rise in prices and sales has spurred construction of “spec” homes, or homes built without a specific buyer identified.

DataQuick reported that 163 new homes sold in Orange County last month, double the number sold in the same month a year ago. New home prices were up 23.1 percent, the biggest percentage gain among three housing types.

Resale house sales were up 30.1 percent last month, and the median price increased 15.6 percent. Resale condo sales increased 19 percent, with prices up 17.6 percent.

Veling, the Brea housing consultant, called the current robust market “an overreaction to the very long downturn we have experienced.”

There’s pent-up demand because home sales lagged the number of new households created during the downturn, he said.

“This too shall pass, and normalcy and balance will return,” Veling said.

Register staff writer Marilyn Kalfus contributed to this report.

Contact the writer: 714-796-7734 or jcollins@ocregister.com