Existing home sales tumble 9.6%

NEW YORK (CNNMoney) -- Sales of existing homes fell in February after three straight monthly increases, an industry group said Monday.

According to the National Association of Realtors, homes sold at an annual rate of 4.88 million in February, down 9.6% from January and 2.8% lower than February 2010 sales.

The report was worse than economists had expected. A consensus of experts surveyed by Briefing.com had forecast an annualized sales rate of 5.05 million.

At the same time, the median home price declined 5.2% compared to the previous year, to $156,100.

"Housing affordability conditions have been at record levels and the economy has been improving, but home sales are being constrained," Lawrence Yun, NAR chief economist, said in a statement.

Yun said the housing market recovery is bound to be rocky, especially with the tight credit market.

NAR reported that all-cash sales went up to a record 33% of the total, up from 27% a year earlier. It estimated the percentage of investor purchases hit 19%, the same level as a year ago.

"The decline in price corresponds to the record level of all-cash purchases where buyers -- largely investors -- are snapping up homes at bargain prices," Yun explained. "We'd be seeing greater numbers of traditional home buyers if mortgage credit conditions return to normal."

The decrease in sales was accompanied by an increase in supply. Inventory rose 3.5% to 3.49 million units, an 8.6-month supply at the current rates of sales.

Normally, a five or six-month supply is considered a good balance between supply and demand.