Home sales across the state lost some steam in December, but still increased nearly 2 percent from the same time the year before as homebuyer tax credits continued to fuel demand and rising prices, according to a report out Friday.

Still, there's lingering concern about more foreclosures coming on the market as federal tax credits could come to an end later this year.

The median price of a home in California was $306,820, and Los Angeles County followed suit with a median of $338,000, a 5.6 percent increase from December 2008, according to the California Association of Realtors.

Overall, CAR officials considered the numbers strong, and the result of continued homebuyer interest in tax credits, as well as historically low interest rates and prices.

But observers warned that the market - which has showed signs of a resurgence over the last few months - is not out of the woods.

"Lot's of people say the housing recovery is here," said Jack Kyser, founding economist of the Los Angeles County Economic Development Corporation. "I would not be ready to say that."

That's because the bankers are still holding on to many foreclosed homes, which have to come on to the market.

The question is, will demand continue when they do, and will Congress once again extend tax credits to drive the buying?

Some who study the industry have wondered if demand has been tapped out - much like the Cash for Clunkers program tapped a temporary demand for cars, only to go back to little demand once the program ended.

In the San Gabriel Valley, some areas reflected the county and state numbers, and some didn't.

Alhambra ($425,000), for instance, saw prices rise 4.2 percent. While Azusa ($242,500) saw its median home price fall 8.5 percent compared to December 2008.

Whittier was up 1.5 percent to $340,000, and El Monte was up 8.6 percent to $315,000.

In Whittier, Realtors are beginning to see more defaults of higher-price homes, said Realtor David Baldridge.

"But we've also seen a real drop-off in buyer traffic," he said.

Baldridge was among those wondering if it was the holidays or a real slow-down in demand after months of buyer frenzies.

CAR officials said lean inventories, in addition to the tax incentives, has led to nontraditional seasonal variations.

They expected the state's median price to fluctuate around $300,000 throughout the first quarter.