(Reuters) - Existing home sales rose more than expected in August to the fastest annual pace since March as falling prices and low interest rates drew more buyers into the market, the National Association of Realtors said.

Sales climbed 7.7 percent month over month to an annual rate of 5.03 million units, the NAR said on Wednesday. The median price was 5.1 percent lower than a year earlier.

Rising rents are also helping Americans decide to buy homes, the NAR said.

"Favorable affordability conditions and rising rents are underlying motivations," Lawrence Yun, chief NAR economist, said in a statement.

Yun said the increase in sales came despite some disruptions from Hurricane Irene, which battered much of the East Coast at the end of the month.

Economists polled by Reuters had expected sales to rise 1.4 percent to a 4.71-million-unit pace. Compared to August 2010, sales were 18.6 percent higher.

The Federal Reserve is expected to hold interest rates near zero following a two-day policy review that concludes on Wednesday, and many expect policymakers will unveil new measures to ease credit further. The Fed's policy has helped keep mortgage rates historically low.

The NAR's estimate for the pace of existing home sales during July was unchanged.

(Reporting by Jason Lange; Editing by James Dalgleish)

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