With sellers finally yielding to the reality of a cooling housing market, the median U.S. home price fell in August for the first time in 11 years and is expected to keep falling for the rest of the year, the National Association of Realtors said yesterday.

The median-priced single-family home fell 1.7 percent in August compared with a year ago, to $225,700, the first drop since April 1995 and the second-steepest decline on record. For condominiums, the median price — half were higher, half lower — fell 2.4 percent to $223,200. At the same time, home sales fell for the fifth month in a row. And the supply of homes for sale reached its highest point in 13 years.

"We have a serious correction taking place in the housing sector," Richard Fisher, the Federal Reserve president in Dallas, said in a speech yesterday. Last week, the Fed voted again to hold interest rates steady, citing weakness in housing.

Sales of new and existing homes, as well as building permits and new construction, are all off 10 percent to 25 percent in the past year. The confidence level of builders, who are slashing profit forecasts and seeing their stocks pounded on Wall Street, plunged this month to the lowest point in 15 years, the National Association of Home Builders said.

"This may be the most over-anticipated and over-analyzed downturn in history," Fisher said. "One prominent CEO told me 'the only situation that's received more intense analysis than the housing market was the birth of Brad Pitt and Angelina Jolie's baby.' "

Still, the pace of the downturn has surprised several economists, including Ian Shepherdson of High Frequency Economics.

"The speed of the collapse has been astonishing," he says. "This time last year, single-family home prices were up 16.4 percent. With inventory still rising, there is no chance of any short-term relief. Prices and volumes have a long way to fall."

The Northeast suffered the worst, with a 5.5 percent drop in single-family home prices. In the South, prices fell 2 percent; in the Midwest, they were off 1.6 percent. Only the West saw a slight gain, of 0.6 percent.

For condominiums, prices plunged 6.5 percent in the West and dropped 4.5 percent in the South. In the Northeast, condos were off 0.7 percent. In the Midwest, prices were flat.

Sellers simply must lower their prices to bring buyers back into the market, said David Lereah, chief economist for the Realtors' association.

Lereah has repeatedly cut his forecast for the housing market this year and says he's now unsure how deep the correction will turn out. Sales of existing homes fell 0.5 percent in August to a seasonally adjusted pace of 6.3 million. There's now a 7.5-month supply of homes for sale, up 60 percent from last year.

"If we have prices drop for the rest of the year and sales also continue to drop, then we will have a bad situation in housing of balloons popping rather than air coming out," Lereah said. Either way, he says, "It's a buyer's market."