Home prices could drop 5% next year if mortgage rates stay at 2-decade highs, Morgan Stanley says

• Home prices could drop as much as 5% next year if mortgage rates stay at this level, Morgan Stanley said.
• "Longer term, if mortgage rates were to stay close to 8%, the headwinds this would represent for demand could prove to have a more negative impact on home prices."
• The median existing US home price rose 2.8% in September from a year ago.

Buyers sidelined from the housing market could find some relief in 2024, as home prices could drop next year if mortgage rates stay close to their current levels, according to Morgan Stanley.