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Sales fell 4.2% compared with August last year. The latest home sales were short of the 3.9 million pace economists were expecting, according to FactSet.

Home prices increased on an annual basis for the 14th consecutive month. The national median sales price rose 3.1% from a year earlier to $416,700.

“Home sales were disappointing again in August, but the recent development of lower mortgage rates coupled with increasing inventory is a powerful combination that will provide the environment for sales to move higher in future months,� said Lawrence Yun, the NAR's chief economist.