The National Association of Realtors' 85.5 August index of pending sales of previously owned homes -- down from July's 91.4 reading -- was the lowest since it began tracking in January 2001, the group said.

The previous low was 89.8 in September 2001, it said.

Most analysts had expected the index to fall about 2 percent.

"Fewer contracts were being written because of mortgage availability issues, and a separate internal survey of our members shows more than 10 percent of sales contracts fell through at the last moment in August, primarily the result of canceled loan commitments," Senior Economist Lawrence Yun said.

Even "creditworthy people" trying to buy homes couldn't "because of the credit crunch," Yun said.

The crunch "has since become less severe, though jumbo loan rates are still higher than they would be under normal conditions," he said.

Northeast sales fell 8.3 percent from July and 18.3 percent from August 2006, the group said. The West was down 2.7 percent and 27.1 percent below a year earlier. The Midwest fell 2.9 percent and 18 percent since August 2006. The South decreased 9.5 percent and 21.3 percent from the same month the year before.