Existing home sales fall 1.7% in September

• Dip in sales rate matches some economists' expectations
• Median home prices rises 11.3% from year ago
• Supply of homes for sale continues to tighten

Sales of existing homes declined in September from August, falling 1.7% to a seasonally adjusted annual rate of 4.75 million, the National Association of Realtors reported Friday.

That compares with an upwardly revised August pace of 4.83 million sales.

Many economists had forecast sales would be flat or down slightly in September, according to reports by Moody's Analytics and IHS Global Insight. Median prices rose 11.3% year-over-year -- to $183,900 last month -- while the inventory of existing homes for sale fell 20% from a year ago.

"Despite occasional month-to-month setbacks, we're experiencing a genuine recovery," said NAR chief economist Lawrence Yun.

The recovery is continuing to move slowly because it's still hard for many buyers to qualify for mortgages, and because inventories have gotten tight, Yun said. The average price is being pushed higher partly because heavily discounted distress sales are a smaller percentage of homes on the market. About 24% of transactions were distressed sales in September, down from 30% at the same time last year.

``Housing's recovery is slow and will remain as such until job growth accelerates,'' Moody's economist Celia Chen wrote in a report issued after the data..``Any improvement, however, is a positive for an economic expansion that is still struggling to gain traction.''

Existing-home sales create fewer jobs than new home construction, but still bolster demand for real-estate agents and add revenue for state and local governments that have been cutting workers since the housing bust, she said.

Other recent data have signaled the housing industry is steadily gaining ground, though still far from the high levels that preceded the housing bust.

A report Wednesday showed builders started construction on homes at the fastest rate since July 2008. Applications for building permits -- a sign of plans for future construction -- also hit their highest rate since July 2008.

Meanwhile, the Federal Reserve's purchases of mortgage bonds are keeping mortgage rates near historic lows.

The average rate on a 30-year mortgage fell to 3.37% this week, from 3.39% a week ago and just a hair above the record low of 3.36%, Freddie Mac reported Thursday. For a 15-year mortgage, a popular refinancing option, the average rate is 2.66%. That is down from 2.7% a week ago.