Drawn in by dropping prices, home buyers are exploring the housing market again, reports say.

Sales climbed 7.7 per cent from the previous month to an annual rate of 5.03 million units, the National Association of Realtors said on Wednesday. The median price was 5.1 per cent lower than a year earlier.

"This housing market is still very distressed," Michael Hanson, an economist at Bank of America Merrill Lynch in New York, told Reuters.

"We have to get a lot of good news for a meaningful turnaround in the housing market," he said.

While a positive news today, analysts are saying the August sales jump is not indicative of a constant improvement.

The general remarks of analysts is the outlook for housing prices remains bleak. Reuters reported a survey by MacroMarkets LLC, which showed economists expect home prices to rise just 1.1 per cent a year through 2015.

Compared to a year ago, the rate of home sales has surged 18.6 per cent from a low number of 4.24 million homes. Sales have picked up as home prices have fallen. The median price for an existing home was $168,300 in August, down 5.1% from a year ago.

"All year, the relationship between home prices, mortgage interest rates and family income has been hovering at historic highs, meaning the best housing affordability conditions in a generation," said Ron Phipps, president of NAR, in a written statement.

"The biggest factors keeping home sales from a healthy recovery are mortgages being denied to creditworthy buyers, and appraised valuations below the negotiated price," said Phipps. He recommended that community banks and small regional banks might be the best option for a prospective home owners.