San Fernando Valley housing prices continued making big gains in July amid shrinking sales of distressed properties and a modest uptick in inventory, a trade association said Monday.

In July, the median price of a previously owned Valley house increased 29 percent — or $113,000 — to $505,000, from $392,000 a year earlier, said the Van Nuys-based Southland Regional Association of Realtors. That reflects a $2,500 decrease from June.

Sales remained sluggish because of tight inventory of 1,470 properties, nine more than a year ago and a 0.6 percent increase. But July was the first year-to-year inventory increase since April 2011 and followed a 12 percent drop in June.

July’s numbers indicate the market is moving in the right direction. “I think the numbers are indicative that we are entering into a more traditional real estate market,” said Jim Link, the association’s CEO. “Prices are still on the increase, but that is being tempered a bit. We had that fast-out-of-the gate (jump) where a lot of investors were coming in and bidding up prices, and now there are more equity sales. I think it bodes well for the consumer. With the fire sales, hysteria and frenzy behind us, residential housing is inching closer to a normal, healthy market.”

Last summer the association began tracking the market share of distressed property sales and during July they hit their level since then, the group said.

In July, there were 768 house and condo sales, with foreclosures accounting for a 5.6 percent share and short sales — deals where lenders accept less than is owned on the property — taking an 11.2 percent share.

Sales in July were a mixed bag, with previously owned houses falling 11 percent to 524 properties, from 589 a year earlier and a 4 percent drop from 544 in June.

The Valley condo market turned in a stronger performance last month, with the median price soaring 40 percent — or $94,000 — to $330,000, from $236,000 in July 2012. The price reflects a $10,000 increase from June.

Condo inventory was up 28 percent from a year earlier — to 244 units from 181 — and up 7 percent from June.

“Realtors report steady condominium activity with owners — many of them above water for the first time in years — deciding to sell, trade up or make improvements,” association president Sharon Barron said in a statement. “As more homes and condos come on the market and demand remains high, this feels more and more like a steady, solid pattern.”

By Gregory J. Wilcox, Los Angeles Daily News