After years of vigorous growth, the fat times are coming to an end in the Los Angeles luxury housing market, as buyers become increasingly cautious in response to the weakening national economy.

From Santa Monica to Studio City and Pasadena to Pacific Palisades, there is a growing inventory of million-dollar-plus homes for sale, industry sources say, as the tension increases between bargain-hunting buyers and stubborn sellers.

Low interest rates continue to fuel the middle-range and starter markets, but sales of high-end homes, many of which are purchased with large sums of cash, have been languishing.

“I think people with a lot of money are waiting to see what’s going to happen. You don’t see a lot of people jumping in right now,” said Steve Levine, vice president of Hilton-Hyland Christies Great Estates, which brokers deals for multimillion-dollar properties on the Westside. “You’re hearing ‘recession, recession, recession.’ And when you hear recession, prices come down.”

Many brokers say that declining activity in the high-end market is due not to a lack of buyers, but the reluctance of sellers to accept less than top dollar for their properties.

Despite the slower sales activity Levine estimates that business is down 30 to 40 percent since the spring prices have not been coming down much.

But with the California Association of Realtors and others projecting as much as a 7 percent drop in home sales next year, the downward pressure is likely to increase. Home values, meanwhile, are expected to continue rising, but at a much slower pace than in the recent past.

That subdued outlook may be overly optimistic to many potential buyers in light of the struggling economy and dislocation caused by last month’s terrorist attacks. And it’s the attitudes of those buyers that are cooling the luxury market right now.

“We have noticed a reluctance on high-end properties this year,” said Robin McCleary of Dickson Realtors in Pasadena. “There are buyers out there. They are visiting homes more than once, and they are bringing their architects and feng shui masters so they are interested. But when it comes to making an offer, they are very reluctant.”

Not by the numbers

DataQuick Information Systems reports that 249 homes worth $1 million or more were purchased in Los Angeles County in August and 267 were purchased in July, the most in consecutive months in two years.

“It’s certainly slowed since Sept. 11, but it’s been gearing back up in the last week,” said Stan Smith, manager of DBL in Beverly Hills. “I think we’re going to have a normal year. Nothing outrageous, but not too slow either.”

Murray Weisberg, associate manager of Coldwell Banker Brentwood North, said the limited supply of luxury homes, particularly in hot spots like Santa Monica and Brentwood, will keep prices up.

“The houses where prices are coming down were priced too high to begin with,” he said.

But McCleary and others, like Manvel Tabakian, estates director for Coldwell Banker in Los Feliz, say everything changed Sept. 11. Besides fear brought on by uncertainty about the economy, another factor confounding luxury home sales is a lack of accurate “comps,” or actual sale prices of comparable homes on the same street or in the same neighborhood. With so much confusion about what is ahead, those numbers are suddenly less meaningful.

“It’s like after the (1992 Los Angeles) riots or the (1994) Northridge earthquake. It’s a time when people are down and not as optimistic,” said Tabakian, pointing out that many wealthy individuals have lost a lot of money in the stock market making them more cautious when it comes to large investments.

Valerie Fitzgerald, previews director for Coldwell Banker, said the luxury market’s middle segment homes priced between $2 million and $6 million has been hit hardest, and well before Sept. 11. Owners in that range who are determined to sell have had to lower their asking prices by up to $1 million in the past year.

Unlike lower- and middle-income buyers who are often trying to move up, sellers of million-dollar-plus homes are more likely to wait out a slump because their reasons for moving are often less pressing.

Another reason to hold out: ego. “They think their house is worth a certain amount and they won’t accept anything less, even if that’s not rational,” Levine said.

Leslie Appleton-Young, chief economist for the California Association of Realtors, said the luxury market is often a barometer for changing market conditions. When the economy took off in the mid-1990s, high-end homes led the steep rise in appreciation. The flip side is now true.

“There’s no doubt that the high-end has typically been most vulnerable to the sort of confidence drop in the market,” Appleton-Young said. “And the whole market is being impacted by the uncertainty right now.”