More U.S. homeowners slashed their asking prices for a third straight month in August to lure buyers into a market hindered by high unemployment, a study showed on Wednesday.

Owners cut prices on 26 percent of homes for sale last month, up from 25 percent in July and the highest since a matching 26 percent in October 2009, real estate website said.

Lingering job market weakness, a hefty supply of foreclosed homes and soft demand after the homebuyer tax credit ended in April kept buyers in the driver's seat in many markets.

Nationwide, sellers continue to slash prices and this is a worrisome trend, said Pete Flint, Trulia's chief executive. However, we're seeing gradual improvement in many U.S. cities -- several for consecutive months.

Homeowners in some areas still grapple with pricing realistically for a housing market that faces many hurdles and a snail's-pace recovery, according to Trulia.

The average home price reduction in August stayed at 10 percent, or $33,892, Trulia found.

Sellers nationally slashed more than $29 billion from houses on the market as of September 1, down from $30.1 billion the prior month but up from $27.3 billion two months earlier.

During a rush to buy homes this spring before the tax credit ended, sellers cut prices by $22.8 billion in March and $25 billion in April, according to Trulia.

The percentage of owners cutting prices held steady or fell in 24 of the 50 largest cities, an improvement from 16 cities in July.

What this shows us is that while we're in for a long climb to bring stability back to the housing market and while it's going to take time, that climb appears to at least be underway in some parts of the country, Flint said. When we see job growth across America, we can begin to discuss stability in the housing market.

Numerous conflicting forces are delaying a sustained U.S. housing market recovery.

Buyer tax incentives of up to $8,000 have expired, the supply of unsold homes is plentiful, foreclosures loom and unemployment and underemployment remain high. Many homes are worth less than the amount of mortgage owed, keeping owners from moving.

On the other hand, affordability is also high with prices down almost 30 percent on average from peaks four years ago and mortgage rates for qualified borrowers at or near record lows.

The 30-year mortgage rate averaged 4.43 percent in August, down from 4.56 percent in July and 5.19 percent in August 2009, according to home funding company Freddie Mac.

Sellers' attitudes in setting home prices also reflect local housing markets.

In California, one of the states that gained the most during the boom years and then fell the most during the bust, sellers have had four years to adjust to the new realities.

Californians are more realistic about what it will take to sell a home and are pricing appropriately, Flint said. The same cannot be said for other areas of the country.

Sellers in major Midwestern cities are among the unrealistic, he said.

The foreclosure crisis hit that region later than other parts of the country. Sellers are still adjusting to price discounts that will draw buyers who demand bargains as they face more possible market erosion, Trulia found.

(Editing by Dan Grebler)