Sales of previously owned homes dipped in July, falling short of investors' expectations, the National Association of Realtors reported Wednesday.

Sales of existing homes fell 3.2 percent to a seasonally adjusted annual rate of 5.39 million, down from 5.57 million in June. Private-sector economists had anticipated a drop, but not one that large.

July marked the first year-over-year decline in existing home sales since November, a sour note among several other recent positive signs regarding the housing market.

Lawrence Yun, chief economist for the group, attributed the slowdown to a lack of supply pushing up prices. Median home prices rose more than 5 percent annually, to $244,100.

"Although home sales are still expected to finish the year at their strongest pace since the downturn, thanks to a very strong spring, the housing market is undershooting its full potential because of inadequate existing inventory combined with new home construction failing to catch up with underlying demand," Yun said.

Wednesday's release followed the news Tuesday that sales of new homes were extremely strong in July. The Census Bureau reported that new-home sales surged to more than 650,000, far above the roughly 580,000 that were expected.

Both reports indicate that demand is strong for construction and that homebuilders may not be ramping up fast enough.

There were only enough existing homes for sale in July to last 4.7 months, a level of inventory that is slightly below normal. During the worst of the housing crisis, there was about a year's worth of inventory, pointing to the fact that few people were interested in buying.

Housing is a large part of the overall economy, accounting for about one-sixth or one-fifth of all commerce, depending on the economic cycle. Officials at the Federal Reserve have been monitoring the still-ongoing recovery in housing for signs of whether they should tighten monetary policy. Wednesday's report means they will have more ambiguous data to consider, rather than a clearly positive trend.

Wednesday's report, however, contained some positive details. Fewer sales were driven by foreclosure or desperation on the sellers' part. Only 5 percent of sales were "distressed," a rate that fell a percentage point from the previous July and 2 percentage points from the July before that.