Typically, Labor Day does mark the "end" of a buying season for most communities--just as Superbowl tends to summon the beginning. Although, in the last two years, I've seen a noticeable decline in the number of buyers here in California as early as Independence Day, with a gradually decline from July through September.
As the others noted, while the number of buyers tails off toward the end of summer, the prices for homes does not necessarily follow the reduction in buyers. What is more likely to happen is that well-priced homes will still sell, but, as a buyer, you're no longer one of 30 offers on the table, you're just one of 3 or 5. Also, the home sellers tend to be more reasonable and less demanding as the season wanes, so you may be able to negotiate more on the "finer" points, such as the termite work, the repairs needed, etc.
Keep in mind that inventory too will fall after Labor Day. Many sellers who do not need to sell their homes will take their home off the market for 5 months, and restart again in the spring, so the number of "good" homes also decreases significantly.
As for prices falling toward the end of the year--I do believe we're in for a small adjustment as we approach the end of the year. We have a lot of homeowners who took out 5/1 ARM loans about 5 years ago, who are due to adjust this year and next, so it's likely that another round of homes will be facing short sale or foreclosure soon, which will increase inventory slightly toward the end of the year. But that's just my opinion--not a statement of fact.
Good luck in your home purchase!!
Grace Morioka, SRES, e-Pro
Area Pro Realty
San Jose, CA