Something strange is going on in California’s real estate market.

While the rest of the country is seeing a surge in home sales volume, California is experiencing the opposite, with the latest reports showing monthly sales volume below this same time last year.

Chart updated 06/28/16

April 2016
April 2015
Annual change
Los Angeles
Orange County
San Diego
San Francisco
Santa Clara

To bring out the trend, the chart above shows a 6-month moving average. Most major California metropolitan areas have experienced a steady decline in home sales volume since mid-2015, with the exception of San Francisco (the blue line). Here, a consistently low sales volume accounts for the wild fluctuations experienced from month-to-month.

What’s going on in the microcosm of California?

Examining the rest of the country, locations experiencing the fastest growth in home sales volume are in low-cost cities — i.e., those that are most friendly to first-time homebuyers. For example, in low-cost Detroit, a staggering 58% more homes sold in May 2016 than a year before, according to Redfin. Cities throughout the Midwest and South, where costs-of-living are a fraction of what they are in most of California, saw large home sales volume increases.

California home prices have risen too fast and for too long, causing potential homebuyers to sit out the market while they wait for their incomes and savings to catch up.

Thwarted ability to keep up with prices

Taking a step back from local markets, the average year-over-year home price increase across California is 8% as of March 2016. In contrast, the latest home sales volume report shows a statewide decrease of 2% from a year earlier.

Home sales volume acts like a magnet for home prices, as prices simply can’t be sustained without sales, which are reflective of homebuyer demand. In today’s case, sales volume is also reflective of homebuyers’ raw ability to keep up with prices.

As mentioned above, home prices have increased at a steady and exhausting 8% clip over the past two years. Before that, prices were rising even faster. Homebuyer incomes need to keep up with price increases for pricing to be sustained—and the average income has decidedly not been able to keep up.

first tuesday anticipates home prices will trend down in the first half of 2017. This will be made worse by rising mortgage interest rates on the horizon.

But it’s not all bad news: the dip will likely be brief and shallow.

The job market — and incomes — continues to improve at a slow but steady pace, and first-time homebuyers are anxious to finally get into homeownership. This influx of Generation Y (Gen Y) buyers, along with the coming mass of Baby Boomers retiring, moving and downsizing, will form the Great Confluence, ushering in the next boom in sales volume and pricing around 2019-2021.