Most of the housing news lately has been positive, so Thursday’s news of a 5.4% drop in June’s existing home sales was a bit of a surprise.

One reason for the drop: Sales are sluggish in the lower end of the market due to a scant supply of homes for sale in many parts of the country. That’s because fewer new foreclosures have been listed for sale over the past year and investors have snapped up the bulk of the current stock.

In June, sales of properties priced under $100,000 in Western states were down 36% from a year earlier, according to the National Association of Realtors, which publishes the monthly report. Nationally sales in that price range were down by nearly 8% from a year earlier.

Overall, the Realtors’ group said sales decreased to a seasonally adjusted annual rate of 4.37 million. It was the weakest report since October 2011, but sales were still 4.5% above the same month a year earlier.

The Realtors’ report said home sales last month fell compared with a month earlier in all four regions.

Here’s how analysts viewed the report:

Jed Kolko, chief economist, Trulia: “This morning’s existing-home sales report shows the effect of tightening inventory on the housing market…With fewer homes to sell, sales fell in the last month… Tight inventory is a necessary step on the road to recovery. As prices start to rise, buyers get impatient but sellers want to hold off. Longer-term, rising prices will encourage new construction and lift homeowners above water, both of which will bring more homes onto the market and increase inventory.”

Patrick Newport, U.S. economist, IHS Global Insight: “The housing market is back on track. This does not mean that home sales and housing starts will be up every month. There will be bumps on the road.”

Michael Gapen, economist, Barclays Capital: “Altogether, the report is a disappointment from a rate of sales perspective, but the rate of existing home sales is still 4.5% above year-ago levels and the pace of sales in June is in line with what was observed in (the fourth quarter of 2011). We still see conditions in the existing home market as putting downward pressure on inventories and as supportive of a gradual cleansing of shadow inventory. Our view is that housing is in a recovery phase, but one that will be restrained by the availability of credit, pace of improvement in labor market conditions, and overhang from distressed and foreclosed properties.”