The sales rate of existing homes fell nearly two percent from August to September, according to the National Association of Realtors' latest report, as rising prices continue to impede affordability in many major markets. Home prices increased 11.7 percent year-over-year in September due to limited inventory and a drop in distressed home sales.

Existing home sales declined in September after hitting the highest level in nearly four years, while limited inventory conditions continued to push home prices upward in much of the country, according to recent data from the National Association of Realtors (NAR).

Total existing home sales declined 1.9 percent to a seasonally adjusted annual rate of 5.29 million in September from a downwardly revised 5.39 million in August. Sales were 10.7 percent above the 4.78 million-unit pace in September 2012, and have remained above year-ago levels for 27 consecutive months.

"Affordability has fallen to a five-year low as home price increases easily outpaced income growth," said Lawrence Yun, NAR's chief economist. "Expected rising mortgage interest rates will further lower affordability in upcoming months. Next month we may see some delays associated with the government shutdown."

Single-family home sales slipped 1.5 percent to a seasonally adjusted annual rate of 4.68 million in September from 4.75 million in August, but were 10.9 percent above the 4.22 million-unit pace in September 2012.

The national median existing-home price for all housing types was $199,200 in September, up 11.7 percent from September 2012. This is the 10th consecutive month of double-digit year-over-year increases. The median existing single-family home price was $199,300 in September, which is 11.4 percent higher than a year ago.

Foreclosures and short sales accounted for 14 percent of September sales, up from 12 percent in August, which was the lowest share since monthly tracking began in October 2008; they were 24 percent in September 2012. A lower share of distressed sales account for some of the growth in median price.

Total housing inventory at the end of September was unchanged at 2.21 million existing homes available for sale, which represents a 5.0-month supply5 at the current sales pace, compared with a 4.9-month supply in August. Unsold inventory is 1.8 percent above a year ago, when there was a 5.4-month supply.

NAR president Gary Thomas said the market will have to overcome far-ranging consequences stemming from uncertainty in Washington. "Just one impact of the recent government shutdown – delays in tax transcripts needed for approval of mortgage loans – put a monkey wrench in the transaction process and could negatively impact sales closings in next month's report," Thomas said.