Thanks for posting, and for explaining your reasoning!
So, we're told that wood-frame houses are much better at withstanding earthquakes than masonry houses, but that a recent earthquake destroyed a wood-frame house and not its neighboring masonry house.
We're asked to explain this result. Now, your point about probabilities vs. one isolated incident is well taken; it's true that this one result doesn't disprove the premise that wood-frame houses are sturdier in a quake. But that fact doesn't explain the result of the earthquake in question, that is, it doesn't help us understand why this wood-frame house was destroyed even as the neighboring masonry house stayed standing.
Either way, answer (A) doesn't actually have anything to do with the probability-vs.-anecdote issue. Whether wood-frame houses are more common, less common, equally common, or whatever has precisely zero bearing on whether "percentages may still be accurate," as you put it; moreover, because we're explicitly told in the premise that wood-frame houses hold up better than masonry ones, the accuracy of that claim isn't even in question. It's given as a fact.
Answer (C), on the other hand, helps explain the result of the earthquake because if the walls of the wood-frame house were once damaged in a flood, it's likely that their ability to withstand earthquakes was diminished. You're right that this isn't a 100% watertight* explanation, but it gets us much further than any of the other answers. And it's really a small jump to infer that walls damaged by flooding would be structurally weaker.
(B) is wrong for exactly the same reason that (A) is wrong. This tells us nothing about why the wood house collapsed!
(D) is tempting, but it's too big a leap to go from "more expensive" to "sturdier." The inference required for answer (C), that damaged walls are less able to withstand an earthquake, is much more justified.
(E) is sort of superfluous, since we're already told in the stimulus that at least one house collapsed.
Does that answer your question? Please let me know if you still think (A) is just as valid as (C).
*no pun intended
#officialexplanation