California is often seen as a barometer for the rest of the nation's housing market. If that is the case, then housing this fall is not looking good. Southern California home sales fell to a three-year low in July, according to CoreLogic DataQuick, a research firm, with San Diego leading the way.
San Diego sales volume fell 18.5 percent in July from a year ago, a far deeper slide than the rest of the state. Prices are still higher than last year, but the gains are easing. The median price of a San Diego home hit $445,000 in July, up 6.6 percent from a year ago. The streak of double-digit annual home price appreciation in much of California ended in June.
"Homes that are in good condition and priced well are still selling quickly," said Geoffrey Schiering, a San Diego Realtor. "The inventory of homes for sale has risen slightly, but remains at a relatively tight 3-month supply. However, the number of closed sales has dropped substantially…this suggests that as some sellers have begun pushing their list prices higher, more homes are failing to sell."
Prices came a long way in a couple of years, and now a lot of would-be buyers just can't stretch their finances enough to buy in today's more conservative lending environment. That's not the only reason price appreciation is easing, but it's one of the main ones," wrote Andrew LePage, CoreLogic DataQuick analyst in a report released Wednesday.
A big reason price gains are easing is because there are fewer investors and all-cash buyers in the market. The number of foreclosures and distressed home sales has been falling steadily; absentee buyers in southern California, largely investors, fell to the lowest level since 2010 in July. Cash buyers accounted for 24.5 percent of the market in July, the lowest share in more than four years.
—By CNBC's Diana Olick