By JIM CARLTON

SAN JOSE, Calif. -- A home-sales revival that began last year in some of California's cheaper inland areas has begun to spread to several more expensive coastal areas, another hint that devastated real-estate markets in the state -- and other parts of the country -- may see less grim days ahead.

Homes are selling briskly again in the lower end of the market in Santa Clara County, just south of San Francisco, with prospective buyers making multiple offers and bidding well above asking prices. The median sales price of a single-family home in May was $445,000 in the county, up 5.7% from February, when prices stopped dropping.

Santa Clara County is one of several areas around the U.S. where prices have dropped far enough to lure buyers, including investors, back into the market. Other metro areas showing this trend include the northern Virginia suburbs of Washington, parts of Phoenix and San Diego, said Ivy Zelman, chief executive of research firm Zelman & Associates. Even in glutted markets like southern Florida, investors are "gobbling up distressed inventory" in some areas, she added.

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Homes are designated as sold on a map of a new development in South San Francisco, Calif., last month. Homes in the area are selling briskly again.

In Northern California, a big factor is first-time buyers like Denise and Steve Petrosky, who are newly optimistic about the market and can afford a home for the first time. The Petroskys in February paid $374,900 for a three-bedroom home in Morgan Hill, just south of San Jose, that last sold in 2006 for $610,000.

The couple were too leery to enter the market last year while prices were still heading down, said Mrs. Petrosky, 43 year old, an office manager, but felt prices had bottomed early this year. "Basically, we had set a budget what we could afford, which was below $400,000," Mrs. Petrosky said. "When the prices came down below that, we bought, because we could afford to."

Home prices are still falling in many California markets. But the state's average existing single-family home price has been inching up for two months, with the median sales price climbing to $256,700 in April from $247,590 in February. Much of that increase is thanks to a growing number of pockets of recovery in the housing market.

In Northern California, the median price has risen for four straight months in Santa Clara and for three months in Contra Costa County, according to estimates by MDA Dataquick Information Services, a market-research firm in La Jolla, Calif. In Southern California, the median price has risen or stayed the same three months in a row in Los Angeles County.

Those price increases might not presage a lasting resurgence in California's housing market. The state's high unemployment rate -- 11.5% in May -- could lead to more foreclosed homes that banks could then dump on the market. California's median home price remains down 37% from a year ago.

More broadly, Ms. Zelman and other housing economists cautioned against interpreting signs of greater sales activity as meaning the housing bust was nearly over. Interest rates on 30-year, fixed-rate prime mortgages have risen well above 5% in recent weeks and could rise further if inflation fears push up rates. A national tax credit for first-time home buyers ends Nov. 30, removing a big incentive.

"The overall economy in California hasn't gotten its footing," said Katherine Aguilar Perez, executive director of the Los Angeles office of the Urban Land Institute, an industry think tank. "So it's difficult for me to say we have hit bottom." Still, she said, "there are some pretty clear signals there is some leveling."

A look at Santa Clara County shows some of the dynamics behind the leveling. Home to Silicon Valley in the north, the county of 1.8 million residents went into the slump with the rest of the state, with county unemployment shooting above 10% this year from 5% in 2007. The median price of a previously owned home fell 48% to $420,000 in January from a high of $805,000 in August 2007, according to Dataquick.

Late last year, the county's sales still lagged behind those in inland areas like Riverside and San Bernardino counties, where sales volumes were up 251% in November 2008 over November 2007, according to the California Association of Realtors. Santa Clara County's November sales were up only 16%. The inland sales were booming, in part, because prices fell further there.

Then the lights seemed to turn back on in Santa Clara County home sales. Sales were up 40% in December, and kept rising into 2009. The median price, which had slid steadily since June 2008, stopped falling in February. The number of pending sales in the county has nearly doubled to 3,882 as of last week from 2,096 a year ago, according to the Santa Clara County Association of Realtors.

The biggest catalyst, local agents say, has been affordability. By April, the number of Santa Clara county residents who could afford a home in the county, based on household income, had jumped to 50% from 18% two years ago, said Quincy Virgilio, president of the Santa Clara County Association of Realtors.

Typical buyers are Scott and Yuriko Herbig. Mr. Herbig, a 28-year-old engineer, said they had a budget of less than $400,000, and couldn't find anything in that range when they began looking in 2008. Then, early this year, Mr. Herbig said, the market suddenly started filling with homes under $400,000. The couple in March bought a four-bedroom home in Gilroy for $362,000. "We got lucky," Mr. Herbig said. "I think we hit right at the bottom."

As in other areas of California, the hottest part of the Santa Clara market has been at the lower end -- in this area, that's under $600,000. For example, prices rose 15.6% to $540,000 in April in one zip code near downtown San Jose from $467,000 in January, according to Dataquick.

By contrast, prices in some higher-income neighborhoods in Santa Clara County are still falling -- such as in parts of tonier towns like Cupertino and Los Gatos. Agents said that reflects borrowers' problems getting jumbo mortgages to make those purchases. Home prices are still falling in parts of San Francisco and San Diego County for the same reason, they said.

—James R. Hagerty contributed to this article.

Write to Jim Carlton at
jim.carlton@wsj.com