Not hard to explain. Smallish houses in SD (under 1500 sf) behave more like condos: many were bought recently by investors who now can’t wait to sell them, and so those prices are dropping. OTOH, medium sized houses (2000-2400 sf) haven’t dropped in prices yet because many are actually owner-occupied, and are therefore less liquid. These prices will drop too, but it’ll take some more time–the owners are still in denial and hoping that prices will come back up again next spring. Of course, we know prices can only go down.

BTW, when I read that a segment dropped by 7 or 8%, I interpret that as an actual drop. OTOH, if a segment is up only 0.6%, I of course interpret that as “flat”. Variations less than 1% or 2% (whether up or down), on a y-o-y basis, are within the margin of error.