Will lower mortgage rates keep home prices high?

Home affordability has improved recently due to lower mortgage rates, despite elevated home prices. The FHFA's House Price Index rose 4.5% from July 2023 to July 2024, with existing home sales down 2.5% in August. The median sales price increased 3.1% to $416,700, marking 14 consecutive months of price rises. While housing inventory is improving, with a 22.7% year-over-year increase, limited supply in certain regions still favors sellers.