How do interest rates really affect home prices?

Finance
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I’ve always heard that when interest rates go up, home prices come down, but I’m starting to wonder how true that actually is.
Rates have been high for a while now, but in a lot of places, prices haven’t really dropped much. If anything, it feels like some areas are still crazy competitive.
Is it just that there aren’t enough homes on the market? Or are sellers just holding out instead of adjusting to the new rates?

Are you seeing prices drop in your area? Or is it more of a standstill where buyers can’t afford and sellers won’t budge?

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Don’t forget builders. In some areas, new construction is offering price cuts, rate buydowns, or incentives because they have to move inventory. That’s where I’m seeing some real action. Resale homes? Much slower to adjust.
My take: prices will correct more over the next 12–18 months, but it’s going to be gradual. This isn’t 2008. It’s death by a thousand mortgage-rate cuts.