Updating our running chart, existing home supplies were above 11 months worth of inventory in June, so no progress is being made generally speaking:

That said, some markets are showing signs of improvement. Fortunately, California is among them.

According to Bloomberg:

California led the U.S. in default notices and bank seizures for the 18th straight month in June and had seven of the 10 metro areas with the highest foreclosure rates, according to Irvine, California-based RealtyTrac Inc., which sells default data. That drove down prices and led to "discounted distressed sales,'' with two-thirds of transactions under $500,000, compared with 40 percent a year earlier, the California Association of Realtors said. The amount of time it would take to deplete the supply of homes decreased to 7.7 months from 10.2 months a year earlier, and the median price fell 38 percent to$368,250 last month, according to the Realtors.

If this trend continues, banks with large California exposure might just start to see metrics stabilize, which would be a relief for the market. If you are in the market for a home out in CA but have been wary, it might pay to start browsing for a bargain.