U.S. sales of previously occupied homes fell in September after hitting a two-year high in August, in part because there were fewer homes available for sale.
The National Association of Realtors said Friday that sales dipped 1.7 percent to a seasonally adjusted annual rate of 4.75 million. That's down from a rate of 4.83 million in August, which was the highest in more than two years.
Sales are still up 11 percent from a year earlier. They remain below the more than 5.5 million that economists consider consistent with a healthy market.
Still, the housing market is recovering after a six-year slump. Economists expect sales will rebound in October, noting that mortgage applications have picked up after falling in August.
"We view the dip (in sales) as a pause in an otherwise improving trend," Jonathan Basile, an economist at Credit Suisse, said in an email to clients.
Sales have improved from last year, helped by record-low mortgage rates and steady gains in home prices in most metro areas. Home prices are more stable because there are fewer foreclosures and a low supply of homes has some markets more competitive.
The inventory of homes for sale fell in September to 2.32 million. It would take 5.9 months to exhaust the supply at the current sales pace, the lowest sales-to-inventory ratio since March 2006.
Economists noted that rising prices could spur more homeowners to put their homes on the market, which could fuel more sales.
"Persistent news of rising home prices should help the recovery...as selling conditions continue to improve and sellers become more confident they can get bids closer to the price they are offering," Basile said.
Sales rose slightly in the South last month, compared to August. They fell in all other regions. In the past year, sales have risen at a healthy pace in the Northeast, South and Midwest. They have risen only slightly in the West, where inventories are particularly tight.
The market is still being constrained by tougher lending standards. Many would-be buyers, particularly first-time buyers, are having difficulty qualifying for a mortgage or can't afford the larger down payments that many lenders want.
A low supply of previously occupied homes has also given a boost to the new-home market.
Builders broke ground on homes and apartments at the fastest pace in more than four years last month. The jump could help boost the economy and hiring. Still, the pace of construction is roughly half of what is associated with a healthy market, and new-home sales are coming off depressed levels.
Builders are more confident because they are seeing more prospective buyers visit properties. The National Association of Home Builders/Wells Fargo builder sentiment index, released Tuesday, rose this month to the highest level in more than six years.
There are also signs that the economy is improving. Retail sales rose at a solid pace in September, reflecting growing confidence among consumers. A measure of consumer confidence released last week reached a five-year high.
A recent report from data provider CoreLogic showed that the so-called "shadow" inventory of homes fell 10 percent in July compared with a year ago. The shadow inventory consists of homes in foreclosure or with seriously delinquent mortgages.
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