June home sales in California inched back down despite rising home prices, with most regions posting healthy double-digit annual gains and the statewide median price remaining above the $400,000 mark for the third consecutive month, according to the California Association of Realtors. 

"Despite a small increase in inventory, the supply of housing remains tight in most parts of the state and continues to fuel home price increases," said CAR President Don Faught. 

He added, "The surge in home prices in the past year has given homeowners with previous underwater properties an opportunity to become trade-up buyers. However, many are finding this difficult because they either lack sufficient cash for a down payment or they are concerned that if they sell, they will have no place to go, given limited inventory. Others may be waiting on the sidelines for values to gain even more before selling, which further contributes to tight inventory." 

In California, closed escrow sales of existing, single-family detached homes totaled a seasonally adjusted annualized rate of 414,950 units in June. Sales dropped 3.8% from a revised 431,490 in May and fell 3.7% from a revised 430,960 in June 2012. 

The median price of an existing, single-family California detached home increased 2.7% from May’s revised median price of $417,350 to $428,510 in June. From June 2012, last month’s price was up 33.5% from a revised $320,990. This represents the sixteenth straight month of annual price increases and a full year of double-digit annual gains. 

"The June decline in home sales was attributed partially to the hike in interest rates in recent months. The average 30-year fixed rate had been stabilizing at around 3.5% since the beginning of the year, until it jumped more than 50 basis points in June to reach above the 4% mark for the first time in more than a year and a half," said CAR Vice President and Chief Economist Leslie Appleton-Young. 

She added, "This rate increase portends a somewhat higher rate environment going forward as the Fed mulls over the start of its tapering off program in response to positive signs from the economy."