Sales of single-family existing home sales fell 4% in July after a 1% increase in June, but condominium sales were unchanged month over month, according to the National Association of Realtors (NAR).

The NAR reported Thursday morning that sales of previously owned single-family homes fell to a 4.12 million seasonally adjusted annual rate in July from a 4.29 million rate in June. The June number was revised upward by 50,000 units.

Overall, sales are up 21.5% from a year ago, but that is a distortion caused by the expiration of the homebuyer tax credit last year. In July 2010, homes sales fell 26.2% month over month as tax credit-driven sales dried up.

Wells Fargo Securities senior economist Mark Vitner said home sales appeared to be "finding a bottom" in May and June but now he expects sales and house prices will drift lower.

Vitner noted that sales cancelations due to appraisals and rejections of mortgage applications were a drag on July sales. And the July numbers don't reflect the recent weakness in the economy and the turmoil in the stock market.

He expects home sales will "drift down" during the second half of this year "because credit conditions are going to tighten up and folks are little bit more worried about their jobs."

"Credit standards have tightened," the senior economist said. "It happened in the last few weeks," he added.

According to the NAR report, the median existing single-family home price was $174,800 in July, down 4.5% from the year ago.

There is an inventory of 3.05 million single-family previously owned homes on the market, which is an 8.9-month supply at the current sales pace.

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