Throwing a bit of cold water on the suggestion of some economists who had recently floated comments that an early recovery in the nation's housing markets might yet be in the offing, the National Association of Realtors said Wednesday that existing home sales fell 2.2 percent in August on a seasonally-adjusted basis. Home sales were 10.7 percent below year-ago levels, at a 4.91 million unit pace, the trade group said. That number was below expecations; Bloomberg News reported that economists had expected a drop to a 4.94 million annual rate. The national median existing-home price for all housing types fell further, as might be expected; the median price was $203,100 in August, down 9.5 percent from a year ago, when the median was $224,400. NAR chief economist Lawrence Yun suggested, however, that prices had not fallen as far as the median numbers suggested. "The median home price reflects more transactions related to subprime loans," Yun said. "Fewer than 10 percent of homeowners have subprime loans, but these mortgages are accounting for a disproportionately high share of sales in the current market." His remarks were meant to spin the price drop positively, but if true, may be more ominous than NAR's carefully-constructed press statements might have hoped: a report earlier this month from analysts at Credit Suisse suggested that price/income rations nationwide remain well above historical norms -- and so long as this is the case, they argued, it won't be possible for housing to recover. Of course, the NAR didn't peg the drop in existing home sales as the result of demand or affordability issues; nor did officials at the NAR address historically high inventory levels as problematic. Rather, the focus of the statement was an attempt to explain the drop as the result of a lack of mortgage availability. If borrower could simply get mortgages, the NAR argued, the market would recover. "Home sales will be constrained without a freer flow of credit into the mortgage market," Yun said. "The faster that happens, the sooner we'll see a broad stabilization in home prices that in turn will help the economy recover." But home prices aren't directly impacted by mortgage credit; they are directly impacted, however, by the supply of homes available for sale. And the nation's housing markets remain faced with a huge overhang of inventory. While total housing inventory at the end of August fell seven percent to 4.26 million existing homes available for sale, that total was a 10.4 month supply at the current sales pace -- which means that while inventory is falling, it is still well above to 4 to 5 months of supply that most economists would see as balanced. For more information, visit