Sales of existing U.S. home declined in September, according to the National Association of Realtors, as did home prices, but both levels remain well above levels from the previous year.

Total existing home sales last month fell 1.7 percent to a seasonally adjusted annual rate of 4.75 million, but on the bright side, sales are up 11.0 percent compared with September 2011 when there was a 4.28 million pace.

The national median home price also dropped on a monthly basis, falling to $183,900 from $184,900 in August. Yet the new median price is up 11.3 percent from last year and September marks seven straight months where the median home price has increased from the year before.

“Despite occasional month-to-month setbacks, we’re experiencing a genuine recovery,”said the ever optimistic Lawrence Yun , NAR chief economist in a news release. “More people are attempting to buy homes than are able to qualify for mortgages, and recent price increases are not deterring buyer interest. Rather, inventory shortages are limiting sales, notably in parts of the West.”

Total inventory has been shrinking, and it contracted by 3.3 percent in September to 2.32 million homes for sale. At the current sales pace, that represents a 5.9-month supply, down from a 6.0-month supply the month before and down 20.0 percent from September 2011.

Another sign of recovery for the housing market lies in the number of distressed properties sold. In September, 24 percent of all sales were for distressed homes, including foreclosures and short sales. While that is still a large chunk of the total, it is down considerably from 30 percent one year earlier.

Interest rates are continuing to help make home buying attractive. Freddie Mac reported that the national average rate for a 30-year fixed-rate conventional mortgage dropped to a new all-time low in September to 3.47 percent. Those kind of rates, while not available to everyone have certainly helped more people jump into the market, including first-time home buyers who made up 32 percent of home buyers last month.