NEW YORK (CNN/Money) - Sales of existing homes in the United States dipped a bit in February after setting a record in January, a real estate group said Monday -- but the housing market, a pillar of strength during the latest economic downturn, held its own.

Existing home sales fell 2.8 percent to an annual rate of 5.88 million units in February, the National Association of Realtors said, following January's record 6.05-million-unit pace, which was upwardly revised. Economists surveyed by Briefing.com expected sales at a rate of 5.5 million units.

It was the second-highest pace for sales since the NAR began keeping records in 1968.

"At first glance, this level of activity doesn't seem sustainable, but strong market fundamentals and good weather have given us some unusually strong levels of existing-home sales," NAR chief economist David Lereah said.

U.S. stock prices were little moved by the data and fell in early trading. Treasury bond prices fell.

Unseasonably warm weather and low mortgage rates boosted home sales to record levels in January. Low mortgage rates also fueled record sales in 2001 of 5.296 million existing homes.

The housing market is especially crucial to the economy because home equity is such an important part of consumers' balance sheets. A hot housing market has helped boost consumer confidence and ease the pain of falling stock prices.

To keep consumers spending, the Federal Reserve cut its target for short-term interest rates 11 times in 2001, a record for a calendar year. Fed cuts don't have an immediate impact on mortgage rates, but eventually the easier cost of borrowing spread throughout the economy.

At its first two policy meetings in 2002, the Fed decided to leave rates alone, and it shifted to a neutral stance at its latest meeting, saying the risks to the economy were balanced between a risk of inflation and a risk of economic weakness.

Most observers believe the Fed will begin raising short-term interest rates again some time this year, and mortgage rates also are likely to rise.

"As the economy gains momentum, along with an expected rise in mortgage interest rates, home sales may come down to more sustainable levels, but we expect this year's total sales to be very close to last year's record," Lereah said.

The average rate for a conventional, 30-year, fixed-rate mortgage actually fell in February to 6.89 percent from 7.0 percent in January, the NAR said, citing information from mortgage lender Freddie Mac.

Related links       Existing home sales report

The NAR said the national median price for an existing home was $150,000 in February, up 8.2 percent from February 2001, when the median price was $138,600.

Housing inventory levels stood at 2.08 million units available in February, a 4.2-month supply at the current sales pace. The NAR said five to six months of inventory are necessary to balance supply and demand. The inventory level was 10.1 percent higher than a year earlier.