WASHINGTON (Reuters) -U.S. single-family house prices increased in August even as supply has improved significantly, suggesting affordability would remain a challenge for many prospective home buyers.

House prices rose 0.4% on a month-over-month basis, the Federal Housing Finance Agency said on Tuesday. Data for July was revised up to show prices being unchanged instead of dipping 0.1%, as initially reported. Prices increased 2.3% in the 12 months through August, after rising by the same margin in July.

Housing supply has risen as demand ebbed following a surge in mortgage rates at the start of the year. The inventory of existing homes jumped 14.0% in September to 1.550 million units from a year ago, data from the National Association of Realtors showed last week. A government shutdown h

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