Sales of existing U.S. homes fell to their lowest rate in almost five years, a real estate association said Monday.

The National Association of Realtors said sales in July fell 0.2 per cent from June levels to a seasonally-adjusted annual rate of 5.75 million units.

While that drop is better than the one per cent slippage analysts had been expecting, it still leaves total sales down nine per cent from July of last year.

The median price of homes sold in July — the midpoint where half the sales are above and half are below — fell for the 12th consecutive month. That's the longest sustained decline since figures began being collected in 1969, analysts said.

The median price slipped to $230,200. That's down 0.6 per cent from the median price a year earlier. 

The inventory of unsold homes soared 5.1 per cent to almost 4.6 million units.

Market watchers say the current turmoil in the credit markets will weaken the already battered U.S. housing industry, boosting foreclosures and making it harder to sell homes. 

"This points to continued downward pressure on home prices, with possible contagion to consumer confidence, wealth and spending," said BMO Capital Markets economist Sal Guatieri in a morning commentary.

"The downside risks to the economy remain appreciable, raising the odds of a [U.S. Federal Reserve] easing [of the overnight lending rate]."