Conventional wisdom says you should buy a house when you’re ready, don’t worry about timing the market. That’s what I did last year, and I’ll be honest… I thought I’d be able to refinance by now.

Thank the bond market for that delay — we’ll have more on that below. But first, let’s check on the state of the housing market for new shoppers. Maybe last fall was a good time to buy after all. — Tony Wagner, newsletter editor  

Housing starts dropped in July, down 13.5% year-over-year, according to a new report from the Census Bureau.

The decline suggests the home improvement sector is also looking sour. Case in point: Home Depot reported OK earnings on Tuesday, but said it’s worried about the “frozen” housing market.

Home Depot has been consistently outperforming its own corporate guidance for a long time, but not exactly because the retailer is thriving. Instead, the company has been intentionally setting its expectations low.

“There must be some lumpiness that exists out there in demand that isn’t giving leaders confidence,” said Jaime Katz, an equity analyst at Morningstar.

Pending home sales are down. Housing starts are down. Meanwhile, mortgage rates are up and seem kinda stuck there. The average rate on a 30-year fixed is 6.67%, according to Freddie Mac.

“It’s been sort of a sideways struggle,” Katz said.

That sideways struggle isn’t just about the people who can’t afford to buy. It’s also about the people who can’t afford to sell.

“A lot of people still have mortgages that are, you know, below 3% in rates,” said David Zhang, a finance professor at Rice University.

Twenty percent of mortgages sit below an interest rate of 3% . Half of all mortgages sit below 4%. And sure, eventually people will give up those rates. They’ll change jobs, they’ll divorce, they’ll have kids.

“I think in the long run these things will all resolve itself. In the next year, yeah, it seems tough to see,” Zhang said.

Home Depot seems to agree.

The average worker in the U.S. who stayed in their job between 2021 and 2024 saw their wages decline by 9% after inflation, according to a new paper from ADP and the University of Chicago. Researchers found that decline, rather than inflation itself, is at the root of recent historic lows in consumer sentiment.

About 80% of major metros are now considered a buyer’s market, according to new data from Redfin. That might be surprising given everything we just talked about, but a buyers market doesn’t mean it’s a good time for everyone to buy. Only the wealthiest home shoppers can really take advantage right now.