updated 8/18/2011 11:55:22 AM ET 2011-08-18T15:55:22

Existing-home sales fell in July from already-low levels as the housing market showed no signs of emerging from its long slump.

Total existing-home sales fell 3.5 percent to a seasonally adjusted annual rate of 4.67 million in July from 4.84 million in June, the National Association of Realtors said Thursday. The median price for homes sold in July was $174,000, down 4.4 percent from a year earlier.

The rate was well below the consensus estimate of 4.9 million.

Realtors said tight credit and tough appraisal standards were contributing to the slow sales environment.

“Affordability conditions this year have been the most favorable on record dating back to 1970, but many buyers are being held back because banks are offering financing to only the most highly qualified borrowers, ignoring a large share of otherwise creditworthy buyers,” said Lawrence Yun, chief economist for the trade group.

Mortgage rates have fallen to the lowest level on records dating to at least 1971 but have done little to spark sales activity, in part because of the tough credit standards. The average rate on 30-year mortgages has dropped to 4.15 percent, down from 4.32 percent a week ago, according to mortgage giant Freddie Mac. The last time long-term rates were this low was in the 1950s, when most home loans were 20 or 25 years.

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Mark Vitner, senior economist for Wells Fargo Securities, said contract cancellations have become "the latest roadblock to a sustainable housing recovery, with 16 percent of Realtors surveyed reporting a contract failed to close in July.

"It doesn’t make sense to consistently see so many valuations coming in below negotiated prices, often below replacement construction costs,” Ron Phipps, a Warwick, R.I., Realtor and president of the group said in a statement.

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Prices were down in July from year-ago levels in most of the major markets covered by the Realtors, with Phoenix, Miami and Baltimore showing declines of more than 10 percent. Of the major markets only Cincinnati and San Antonio, Texas, showed significant year-over-year increases.

Overall sales levels were higher than a year ago, when sales hit a cyclical low after the expiration of tax credits. Still unit sales are on track to be slightly below last year's level of 4.9 million, which was the lowest since 1997.

The housing industry has been stuck in an industrywide recession amid a lingering hangover from the boom years in the middle of the last decade. A wave of foreclosures exacerbated by persistently high unemployment has left many markets glutted with inventory.

Many lenders have sharply slowed foreclosures, in part because of paperwork issues but also in an effort to work through existing inventory. That means more foreclosed homes are in the pipeline.

About 29 percent of July sales were "distressed" properties including foreclosures. That level has been typical in recent months.

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