Sales of existing homes fell 7.7% in November, marking a string of 10 consecutive months of decline, the National Association of Realtors reported on Wednesday.

Sales were at an annual pace of 4.09 million, below forecasts of 4.2 million and off 35.4% from a year ago. The median price, however, rose 3.5% to $370,700.

“In essence, the residential real estate market was frozen in November, resembling the sales activity seen during the COVID-19 economic lockdowns in 2020,” said NAR Chief Economist Lawrence Yun. “The principal factor was the rapid increase in mortgage rates, which hurt housing affordability and reduced incentives for homeowners to list their homes. Plus, available housing inventory remains near historic lows.”

The housing sector is reeling from the increase in mortgage rates, which has seen the interest on a 30-year fixed loan double to around 6% from a year ago. Recent dips in mortgage rates have stirred some interest among some homeowners looking to refinance but have not resulted in any increase in demand for new mortgages from prospective homebuyers.

“November sales generally reflect contracts signed in October when mortgage rates were approaching 7%,” Bright MLS Chief Economist Lisa Sturtevant wrote ahead of the latest report. “The Thanksgiving holiday also led to a seasonal sump in sales activity. So, it is not surprising to see home sales down compared to October.”

“However, seasonality only explains some of the slowdown in home sales activity,” she added. “The data on existing home sales released for November is the lowest since 2011, with the exception of the sharp downturn in May 2020 when the pandemic locked down the housing market.”

George Ratiu, senior economist and manager of economic research at Realtor.com, said: “Real estate markets are bearing the brunt of the Federal Reserve’s monetary policy. After flooding the financial system with liquidity in 2020-21 to support the government-induced closing of the economy, the central bank has been tightening borrowing costs and shrinking its balance sheet to combat high inflation.”

“With shelter costs consisting of a large share of price gains, the Fed is hoping that a substantial cooling in housing prices will lead to a stronger pullback in inflation,” Ratiu added.

Also Wednesday, the Conference Board said its consumer confidence index markedly improved in December. The index now stands at 108.3, up from 101.4 in November.

The present situation index, measuring how consumers feel about current economic conditions, rose to 147.2 from 138.3. The expectations index, reflecting how consumers view the short-term future, increased to 82.4 from 76.7.

“Consumer confidence bounced back in December, reversing consecutive declines in October and November to reach its highest level since April 2022,” said Lynn Franco, senior director of economic indicators at The Conference Board. “The Present Situation and Expectations Indexes improved due to consumers’ more favorable view regarding the economy and jobs. Inflation expectations retreated in December to their lowest level since September 2021, with recent declines in gas prices a major impetus.”

The survey also found a switch among consumers in their purchasing plans.

“Vacation intentions have improved but plans to purchase homes and big-ticket cooled appliances further,” said Franco. “This shift in consumers’ preference from big-ticket items to services will continue in 2023, as will headwinds from inflation and interest rate hikes.”