Where are the homebuyers? Where are the sellers?

Housing activity in the resale market tanked again in September, the National Association of Realtors reported on Thursday. Sales of previously owned homes dropped 2% from August to a seasonally adjusted annual rate of 3.96 million. That was 15.4% lower than year ago levels, but above the 3.89 million units forecast by economists polled by Bloomberg.

The NAR is also predicting sales will drop 20% on an annual basis this year.

The sluggish activity reflects how high mortgage rates have been a double-whammy for the housing market. Rates have smothered interest from buyers and quelled the impulse to sell among current homeowners, a dynamic likely to worsen in the near future as rates potentially move higher.

"With mortgage rates remaining near their 20-year high in recent weeks, homeowners are hesitant to list their properties," Jiayi Xu, an economist at Realtor.com, said before the report was released. "This ongoing trend poses difficulties for prospective first-time home buyers in their quest to find a suitable home."

Read more: Mortgage rates at 20-year high: Is 2023 a good time to buy a house?

All four regions of the country recorded annual declines in resale activity in September, the NAR found, while three of the four posted month-over-month drops. Only the Northeast saw an uptick in activity, with sales rising 4.2% from August. Month over month, sales declined by 5.3% in the West, 4.1% in the Midwest, and 1.1% in the South.

Despite the downturn in activity, prices keep rising because inventory remains low. The median existing home price in September was $394,300, up 2.8% from a year ago. Median prices rose in all US regions, too.

The median price increased 5.2% in the Northeast to $439,900 year over year, while prices in the Midwest were up 4.7% to $293,300. In the South, the median price was $360,500, an annual gain of 3.1%. And in the West, prices reached $606,100, up 1.8% from September 2022.

"For the third straight month, home prices are up from a year ago, confirming the pressing need for more housing supply," NAR chief economist Lawrence Yun said in a statement.

Add in mortgage rates that remain at the highest level since December 2000 — hitting 7.57% last week — and it becomes tough for many homebuyers to make the numbers pencil out. (Freddie Mac reports this week's average rate today at noon EDT.)

"Housing affordability is number one with mortgage rates at 23-year highs and likely to keep moving higher," Danielle Hale, chief economist at Realtor.com, recently told Yahoo Finance Live (video above). "And so I think it's going to continue to be a major pain point for households."