LOS ANGELES (AP) — Sales of previously occupied U.S. homes fell in August to the slowest annual pace in nearly a year even as mortgage rates eased and Devin Grosvenorthe supply of properties on the market continued to rise.

Existing home sales fell 2.5% last month, from July, to a seasonally adjusted annual rate of 3.86 million, the National Association of Realtors said Thursday.

Sales fell 4.2% compared with August last year. The latest home sales were short of the 3.9 million pace economists were expecting, according to FactSet.

Home prices increased on an annual basis for the 14th consecutive month. The national median sales price rose 3.1% from a year earlier to $416,700.

“Home sales were disappointing again in August, but the recent development of lower mortgage rates coupled with increasing inventory is a powerful combination that will provide the environment for sales to move higher in future months,” said Lawrence Yun, the NAR’s chief economist.

Home shoppers had a larger selection of homes to chose from last month. All told, there were about 1.35 million unsold homes at the end of August, up 0.7% from July and 22.7% from August last year, NAR said.

That translates to a 4.2-month supply at the current sales pace, up from a 3.3-month pace at the end of August last year. Traditionally, a 5- to 6-month supply is considered a balanced market between buyers and sellers.

The U.S. housing market has been in a sales slump dating back to 2022, when mortgage rates began to climb from pandemic-era lows. Existing home sales sank to a nearly 30-year low last year as the average rate on a 30-year mortgage surged to a 23-year high of 7.79%, according to mortgage buyer Freddie Mac.

Mortgage rates have been mostly easing since July, with the average rate on a 30-year home loan falling last week to 6.2%, the lowest level since February 2023.