Sales of existing homes declined slightly in August, dropping 2.7% on a monthly basis to a seasonally adjusted level of 5.1 million houses, according to numbers released Thursday by the National Association of Realtors (NAR). On an annual basis, August activity is up 3.4%.

“Home sales retrenched from a very strong improvement in July but continue to be much higher than before the stimulus,” said Lawrence Yun, NAR’s chief economist. “The first-time buyer tax credit is having the intended impact of bringing buyers into the market, allowing them to take advantage of very favorable affordability conditions.”

First-time buyers, who have until Nov. 30 to settle on a home if they want to take advantage of the federal housing tax credit, continue to be active in the housing market. According to NAR, they represent 30% of August transactions.

Despite August’s slightly lower sales pace, the inventory of existing homes continues to shrink. The number of existing homes dropped 10.8% last month, to 3.62 million, or a supply of 8.5 months.

That’s good news for new-home builders, whose offerings have suffered from pricing pressure and low demand against the volume of bargain-priced existing homes on the market. “We believe [the existing home] inventory’s sharp decline on both a total and single-family basis, down 11% and 9% to 3.62 million and 3.0 million, respectively, represents a solid positive,” Michael Rehaut, analyst for J.P. Morgan Securities’ home building and building products group, wrote in a research note Thursday.

Pricing remains problematic. The national median existing home price slipped 12.5% year-over-year to $177,700. That stands significantly lower than the median price for new homes, which was reported as $210,100 in July, according to the Census Bureau’s monthly figures.

Alison Rice is senior editor, online, at BUILDER magazine.