New home sales in the United States dropped 8.9 percent in October as affordability continued to be a tough challenge for home buyers, National Association of Home Builders (NAHB) said on Wednesday.

Sales of new single-amily houses fell to 544,000 in October, which was lower than the revised September reading of 597,000, according to the U.S. Census Bureau.

"This is the lowest sales pace since December 2016," NAHB noted.

"The November reading is consistent with reports from our builders, who say that the job market and demographic tailwinds bode well for housing demand but rising interest rates and home prices are forcing customers to take a pause," said Randy Noel, chairman of the NAHB.

"Policymakers should see this drop in sales as an indicator that housing affordability will continue to slow down the market," Noel said.

Meanwhile, the inventory of new homes for sale rose to 336,000 in October, according to NAHB.

NAHB also noted that the median sales price dropped 3.6 percent to 309,700 U.S. dollars as the market is shifting to townhomes and other lower-cost houses.

"Home sales declined this month as housing affordability continues to be a hurdle for consumers," said NAHB Senior Economist Danushka Nanayakkara-Skillington

"While a solid economy and positive demographics support future demand for housing, it is critical to address this mounting affordability crisis," the senior economist added.