Existing-home sales unexpectedly dipped in August, but the decline likely represents investors pulling back, a long-term positive for first-time buyers and the overall market.

Sales ran at an annual rate of 5.05 million, down 1.8% from July, the National Association of Realtors said Monday. Analysts had expected 5.18 million. For the year, sales are 5.3% lower, while prices are up 4.8% and inventory 4.5%.

But the most important figure of August's numbers was what NAR called "a marked decline in all-cash buyers." All-cash sales made up 23% of transactions, the lowest share since December 2009. Investors, the bulk of all-cash buyers, accounted for 12% of home purchases, down from 17% in August 2013.

That decline is welcome, analysts say.

"It is a sign that the market is in transition," said Daren Blomquist, RealtyTrac vice president. "It's a necessary transition because the housing market could not continue to grow on the backs of investors and other cash buyers. The recovery needs to expand to the masses, the first-time buyers and move-up buyers.

RealtyTrac, which tracks a broader set of home data than NAR does, puts the all-cash share of purchases at 38% at the end of Q2, vs. a long-term average of 32% going back to 2001.

Low-Hanging Fruit Picked

Investors have frequently used cash to finance purchases of distressed sales since the housing bubble burst. But now that low-hanging fruit is gone, Blomquist said. "We're getting closer to normal," he said. "I do think that's a good thing, it's just a little bit scary for the market now that it can no longer depend on those cash buyers.

An immediate impact of investors calling it quits has been slower price gains. The S&P/Case Shiller 20-city index rose 8.1% vs. a year ago in June, cooling from double-digit increases. For the first time since 2008, all 20 cities surveyed saw lower annual rises than in the prior month.

"We're seeing more sustainable price gains, which is good for people who have homes and it's not putting prices out of reach for those who want to buy," said David Berson, chief economist with Nationwide Insurance who previously held that role at Fannie Mae.

But stiff headwinds continue to work against would-be buyers. Young people are dealing with high student loan debt and a still-uncertain job market in which wages have barely budged.

Student debt will reduce overall home sales by 414,000 this year, or 8%, according to a report from John Burns Consulting.

Credit 'Abnormally Tight'

Mortgage credit is still hard to come by, except in the jumbo space or for borrowers with the most pristine credit scores, a concern the Federal Reserve has highlighted. Fed Chair Janet Yellen called lending "abnormally tight" in a recent press conference.

"Mortgage lending was way too easy going into the housing boom, and now it's too tight because it was too easy," Berson said. "We will likely move back to the middle but when is anyone's guess. But when we do, the market will improve.

The labor market is the key driver of health in housing, Berson said, and as jobs continue to advance, so will homebuying. Another bright sign: confidence among homebuilders, who must gauge potential for household formation, hit a high not seen since 2005 in September.

"A firming job market is helping to unleash pent-up demand for new homes and contributing to a gradual, upward trend in builder confidence," the National Association of Home Builders said.

Major builder Lennar (LEN) this month reported a 44% earnings per share gain for its fiscal Q3, with revenue and order growth also stronger than expected.

But whether that pent-up demand will actually translate into actual purchases is a question that dogs the market, Blomquist said. He thinks it's possible investor activity drove prices high enough in some markets to price out first-time and move-up buyers, who are relying on tepid wage growth to finance their purchases. Those younger buyers may also be scarred by the housing crisis and may think homeownership is not right for them.

"I'm generally optimistic," said Blomquist, "but I have lower expectations than other people. 2014 has already proved itself to be a reality check on the recovery, and will continue to do so."