Shift in California Home Sales

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Investors are playing a smaller role in the California housing market as the number of distressed properties shrink, according to new data from the California Association of Realtors.

Distressed property sales dropped to 17.1 percent of sales in July, compared to 20.1 percent in June and 40.8 percent in July 2012, the association reported.

"The increase in the share of equity sales reflects a market that is fully transitioning from investor purchases of distressed homes to primary home purchases by households," C.A.R. chief economist Leslie Appleton-Young said in the report. "The market continues to improve as more previously underwater homes gain equity due to recent upward movement in prices."

Equity sales - or non-distressed property sales - accounted for 82.9 percent of sales, the highest share since December 2007. The share of equity sales has risen on a month-to- month basis for 17 of the last 18 months, CAR reports.

The number of short sales fell to the lowest point since April 2009 at 11.6 percent, down from 12.9 percent in June and 22.7 percent of all sales a year earlier.

"The continuing decline in short sales indicates more previously underwater homes are moving into positive equity as home prices remain on an upward trend," the report says.

The median price of a single family home in California is up more than 30 percent in the last year, in part due to a tight supply of homes for sale. Inventory is still "tight" the association reports, with the "Unsold Inventory Index" essentially unchanged in the last month.

Pending home sales were also flat in July, with CAR's Pending Home Sales Index dropping 0.2 percent in July to 114, down from 114.3 in June, based on signed contracts. Pending sales were down 1.5 percent from the 115.8 index recorded in July 2012.