Economists polled by Reuters had expected sales to drop to a 5.13 million unit pace in October.
At the same time, the median price rose 12.8 percent in October from a year ago to $199,500. It was the 11th straight month of double-digit gains, and up from last month.
October's inventory was 2.13 million existing homes for sale, up just 0.9 percent from the year-earlier period, representing five months' supply at the current pace.
The pace of annual sales growth decelerated to 6 percent in October, as tight credit conditions and high borrowing costs are impacting the housing market recovery. Purchases fell in the month in all four regions, with the most dramatic drop seen in the West, where they declined 7.1 percent.
First time buyers remain on the sidelines, representing 28 percent of all home purchases, which is below the historical average. %VIRTUAL-article-sponsoredlinks%The rate has fallen below 30 percent for 7 straight months. At the same time, cash purchases remain elevated and account for about 31 percent of home purchases. Investors snapped up 19 percent of the market, similar to the September sales figures.
Sales in coming months are also expected to be hampered by a lack of inventory on the market and a government shutdown that has halted some final property transactions.
The NAR said a combination of high home prices and increased mortgage rates was hurting affordability. The trade group said the rate of newly constructed homes is disappointing and hampering the broader housing market recovery.
U.S. home resales fell in October due to an inventory shortage and high property prices that have dampened buying power and are expected to drag on the recovery.
9 Numbers That'll Tell You How the Economy's Really Doing
Sales of Existing Homes Slip 3.2% in October
The gross domestic product measures the level of economic activity within a country. To figure the number, the Bureau of Economic Analysis combines the total consumption of goods and services by private individuals and businesses; the total investment in capital for producing goods and services; the total amount spent and consumed by federal, state, and local government entities; and total net exports. It's important, because it serves as the primary gauge of whether the economy is growing or not. Most economists define a recession as two or more consecutive quarters of shrinking GDP.
The CPI measures current price levels for the goods and services that Americans buy. The Bureau of Labor Statistics collects price data on a basket of different items, ranging from necessities like food, clothing and housing to more discretionary expenses like eating out and entertainment. The resulting figure is then compared to those of previous months to determine the inflation rate, which is used in a variety of ways, including cost-of-living increases for Social Security and other government benefits.
The unemployment rate measures the percentage of workers within the total labor force who don't have a job, but who have looked for work in the past four weeks, and who are available to work. Those temporarily laid off from their jobs are also included as unemployed. Yet as critical as the figure is as a measure of how many people are out of work and therefore suffering financial hardship from a lack of a paycheck, one key item to note about the unemployment rate is that the number does not reflect workers who have stopped looking for work entirely. It's therefore important to look beyond the headline numbers to see whether the overall workforce is growing or shrinking.
The trade deficit measures the difference between the value of a nation's imported and exported goods. When exports exceed imports, a country runs a trade surplus. But in the U.S., imports have exceeded exports consistently for decades. The figure is important as a measure of U.S. competitiveness in the global market, as well as the nation's dependence on foreign countries.
Each month, the Bureau of Economic Analysis measures changes in the total amount of income that the U.S. population earns, as well as the total amount they spend on goods and services. But there's a reason we've combined them on one slide: In addition to being useful statistics separately for gauging Americans' earning power and spending activity, looking at those numbers in combination gives you a sense of how much people are saving for their future.
Consumers play a vital role in powering the overall economy, and so measures of how confident they are about the economy's prospects are important in predicting its future health. The Conference Board does a survey asking consumers to give their assessment of both current and future economic conditions, with questions about business and employment conditions as well as expected future family income.
The health of the housing market is closely tied to the overall direction of the broader economy. The S&P/Case-Shiller Home Price Index, named for economists Karl Case and Robert Shiller, provides a way to measure home prices, allowing comparisons not just across time but also among different markets in cities and regions of the nation. The number is important not just to home builders and home buyers, but to the millions of people with jobs related to housing and construction.
Most economic data provides a backward-looking view of what has already happened to the economy. But the Conference Board's Leading Economic Index attempts to gauge the future. To do so, the index looks at data on employment, manufacturing, home construction, consumer sentiment, and the stock and bond markets to put together a complete picture of expected economic conditions ahead.