A perennial frontrunner of housing market trends, California's data speaks to recent assertions that rising rates will affect sales more than values.  Home sales volume was slightly lower in June, the result of rising interest rates as well as the ongoing tight supply of inventory. Home prices, however continued to climb with another double-digit year-over-year increase. The state's median price remained above $400,000 for the third straight month.

(Read More: Rate Increases More Likely to Impact Sales than Home Prices)

The California Association of Realtors® (C.A.R.) reports that sales of existing single-family detached units were at a seasonally adjusted annual rate of 414,950 in June, down 3.8 percent from a revised rate of 431,490 in May and 3.7 percent from the estimate of 430,960 in June 2012.

"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 percent since the beginning of the year, until it jumped more than 50 basis points in June to reach above the 4 percent mark for the first time in more than a year and a half," said C.A.R. Vice President and Chief Economist Leslie Appleton-Young.  "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."   

(Read More: Taper Talk Hurts, But Not Enough to Stall Recovery - Freddie Mac)

The statewide median price of an existing single-family detached home rose 2.7 percent from May's median price of $417,350 to $428,510. This was 33.5 percent above the median price in June 2012 of $320,990. Last month was the 16th consecutive one in which year-over-year prices were up and the 12th month when those increases were in the double digits.

"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 C.A.R. President Don Faught.  "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."

The supply of homes for sale inched up to a 2.9 month supply in June from 2.6 months in May. One year earlier the inventory was 3.5 months. Competition for these homes has driven down the median time a house remains on the market from a median of 43.5 days in June 2012 to 27.7 days last month.