Sales of existing homes in the U.S. declined along with prices in August, according to data released Wednesday by the National Association of Realtors.

Existing-home sales fell to a seasonally adjusted annual rate of 4.91 million, a 2.2% decline from July's upwardly revised pace of 5.02 million and a 10.7% drop from the 5.50 million units sold in August 2007. It also falls just shy of economist forecasts for a pace of 4.94 million.

The median sales price for the all types of existing homes in August was $203,100, which marks a 9.5% decline from $224,400 a year ago. The median price for existing single-family homes was $201,900, down 9.7% from August 2007.

Also showing a decline was the total housing inventory at the end of the month -- 4.26 million homes available for sale, which represents 10.4 months of supply vs. a revised July supply figure of 10.9 months.

"The drop hints that the plunging level of new-home inventories (inventories fell the most since at least 1963 in July), is affecting the stock of existing homes," wrote Tony Crescenzi, chief bond market strategist at Miller Tabak, in his

RealMoney.com blog

.

Another contributing factor is the tightening restrictions on mortgage applications. "The difficulty in obtaining a mortgage increased over past couple months, making it more challenging for creditworthy borrowers to find financing," said NAR President Richard Gaylord. "... Interest rates have already declined, but there is a serious question as to whether a cash infusion by the U.S. Treasury into Wall Street would help consumers by improving mortgage funding."

The national average commitment rate for a 30-year fixed-rate mortgage rose to 6.48% in August from 6.43% in July; the rate was 6.57% in August 2007, according to Freddie Mac data. However, last week the 30-year fixed had dropped to 5.78%.

"August sales reflect higher interest rates before the government takeover of

Freddie Mac

(FRE)

and

Fannie Mae

(FNM)

, and the sudden drop in mortgage interest rates over the past couple weeks is improving housing affordability," said NAR chief economist Lawrence Yun. "With higher loan limits and a beefing up of the FHA program, all the mechanisms have been falling into place to increase mortgage availability."

Shares of

SPDR S&P Homebuilders

(XHB) - Get Report

were climbing 65 cents, or 3.4%, to $19.91.

This article was written by a staff member of TheStreet.com.