LOS ANGELES (AP) -- Sales of previously occupied U.S. homes rose in October, the first annual gain in more than three years, with home shoppers encouraged by easing rates and a pickup in properties on the market.

Existing home sales rose 3.4% last month, from September, to a seasonally adjusted annual rate of 3.96 million, the National Association of Realtors said Thursday. That matches the annual pace set in July.

Sales rose 2.9% compared with October last year, representing the first year-over-year gain since July 2021. The latest home sales topped the 3.93 million pace economists were expecting, according to FactSet.

Home prices increased on an annual basis for the 16th consecutive month. The national median sales price rose 4% from a year earlier, to $407,200.

"The worst of the downturn in home sales could be over, with increasing inventory leading to more transactions," said Lawrence Yun, the NAR's chief economist.

There were 1.37 million unsold homes at the end of October, up 0.7% from September and 19% from October last year, NAR said.

That translates to a 4.2-month supply at the current sales pace, up from a 3.6-month pace at the end of October last year. Traditionally, a 5- to 6-month supply is considered a balanced market between buyers and sellers.