Sales of previously owned homes fell unexpectedly in April in a sign the country's tight lending standards are continuing to hamper the housing recovery, a trade group said on Thursday.

Sales slipped 0.8 percent month over month to an annual rate of 5.05 million units from a downwardly revised 5.09 million in March, said the National Association of Realtors.

Today's number is disappointing, said the group's senior economist, Lawrence Yun. Given the great affordability conditions, job creation and pent-up demand, home sales should be stronger, he said.

Economists polled by Reuters before the report were expecting home resales to rise to 5.2 million from the previously reported 5.1 million.

In addition to the tight credit conditions, contract cancellations contributed to the decline in existing home sales, Yun said.

The realtors group warned that proposals to raise the downpayment requirement to 20 percent would slam the brakes on the housing market.

About 37 percent of the market consisted of distressed sales, which includes both foreclosures and sales of homes where the bank agrees to take less than what is owed.

The median home price was $163,700 last month, down 5 percent from April year ago.

(Reporting by Rachelle Younglai, Melissa Bland; Editing by Neil Stempleman)