A wave of falling home prices is spreading to every corner of the nation's most populated state, hot on the heels of falling home prices that have plagued California for the last year.

Like the rest of the nation, declining home sales signaled the beginning of the end for a boom that spawned unsustainable home price appreciation and, ultimately, too many homes consumers couldn't afford.

In California, the boom began to wane at a time when interest rates were rising, incomes and job growth had failed to keep pace with home price inflation, rising energy costs were squeezing wallets and more affordable rental housing was coming on line.

Buyers simply cried "Uncle" and that began to force sellers to lower prices.

"Buyers today have a much greater selection of properties from which to choose, while some sellers are still clinging to price expectations that are no longer valid in today's market," said CAR president Vince Malta.

Nationwide, home prices dropped on a year-to-year basis for the first time in more than a decade when the median price of existing homes slipped nearly 2 percent in August, compared to August 2005, according to the National Association of Realtors.

California, statewide, coming off a record year (2005) in sales and prices, is on track to follow suit.

In August, California's single-family home sales count came in 30 percent short of last August's and condo sales were down more 31.1 percent. The single-family median home price rose only 1.6 percent as the median condo price barely budged up 0.1 percent, according to the California Association of Realtors.

"We experienced the greatest year-to-year sales decline last month since August 1982, when sales fell 30.4 percent," said CAR president Vince Malta.

"This is another indication that we're in the initial stages of a long-anticipated adjustment in the market," he added.

"Initial"?

"Deepening" would be more accurate.

According to CAR, existing home sales have been declining in California every month since October 2005, months before prices even began to slip in select markets. Year-to-year home sales were down 17.6 percent in December 2005, but home prices were still rising at the rate of 5.6 percent.

It wasn't until early 2006 when declining sales began to pull prices down, first in the posh Santa Barbara coastal area, in the less populated hinterlands at the northern end of the state and in between, in portions of wine country north of the San Francisco Bay Area, as well as in Santa Cruz to the south of the Bay Area.

By mid-2006, declining home prices reached the Central Valley, the capital city of Sacramento, another beach community, Monterey, as well as San Diego, Palm Springs and other areas.

Each month shifts another California region or two into the falling home prices list and by August, 12 of the 20 regions tracked had home prices in the red with Silicon Valley, the city/county of San Francisco and other areas poised to join them in the coming months.

When it comes to both new and existing home prices combined more counties are also in red, according to La Jolla-based DataQuick Information Services.

By DataQuick's August measures, the median price of homes declined in San Mateo County by 6.7 percent, in Marin County by 2.3 percent and in Alameda County by 1.5 percent, during the month of August, compared to August 2005.

"Although the median price in the state and in several regions hit an all-time record in August, we expect softer prices toward the end of the year," said CAR vice president and chief economist Leslie Appleton-Young.

"Some areas of the state already have experienced year-to-year declines for more than two months. This is in stark contrast to the past several years when there were constant double-digit increases. The long-term trend remains to be seen," she added.