Existing US home sales drooped to a 13-year low in October. National Association of Realtors (NAR) Chief Economist Lawrence Yun breaks down the unique set of circumstances weighing on homeowners and sellers in the US housing market.

"The challenge is that with higher mortgage rates, it's really hurting the first-time buyers from entering the market. First-time buyers, comprising less than 30% of all transactions, it should be closer to 40% in normal circumstance," Yun tells Yahoo Finance Live. "So we have a divided market: homeowners doing well, yet the potential homebuyers, renters who want to be part of the ownership society, are struggling to get into the market."

Click here to watch the full interview on the Yahoo Finance YouTube page or you can watch this full episode of Yahoo Finance Live here.

This post was written by Luke Carberry Mogan.

Video Transcript

[AUDIO LOGO] BRAD SMITH: US existing home sales numbers came out earlier this week.

And there was a significant drop as the numbers hit a 13-year low falling 4.1% in October and 14.6% year over year.

Mortgage rates also slumped a little over 7% from the prior week with our next guest saying that it's stirring up buying interest and that housing inventory is set to improve after this winter and heading into the spring.

And with more inventory available, there will be more home sales.

Let's bring in National Association of Realtors chief economist Lawrence Yun to dig into what we can expect from the real estate market.

A happy Thanksgiving weekend to you, Lawrence, and always great to get some of your perspective here.

Put some of the context on this data here for us.

Because when we compare it to years and even a decade plus back here, it doesn't look too good.

LAWRENCE YUN: Well, good morning.

We are in a very unique housing cycle where homeowners are unwilling to list their property because they are locked in on those lovely 3%, 4% mortgage rates.

They're all smiling.

Their monthly payments are low.

Their housing wealth has risen greatly.

But the challenge is that with higher mortgage rates, it's really hurting the first-time buyers from entering the market.

First time buyers comprising less than 30% of all transactions.

It should be closer to 40% in normal circumstance.

So we have a divided market.

Homeowners doing well yet the potential home buyers, renters who want to be part of the ownership society struggling to get into the market.

SEANA SMITH: Lawrence, what are your expectations for mortgage rates now that they're lower here for four weeks in a row?

How long do you expect that trend to continue?

What do you think the likely range is as we look ahead to 2024?

LAWRENCE YUN: The mortgage market has pivoted already ahead of the Federal Reserve.

So the mortgage rates were 8% just four weeks ago.

But we have seen four straight weeks of mortgage rate decline now going towards 7.3% and I believe that this trend will continue such that we will be in the 6% mortgage range in spring of next year.

And also, the Fed has to remember there's a lot of hurt in the commercial real estate.

We don't want to have another situation of Silicon Valley Bank.

So whether or not the Federal Reserve would want to help the community bank by lowering interest rate, that will be interesting to observe in the coming months.