The September FOMC meeting isn’t the only thing on the schedule in the US this week, although it’ll probably feel like it.

Also on deck are key updates on the US housing market at yet another critical juncture.

By now, the narrative is all too familiar. Elevated mortgage rates are suppressing demand, but unfortunately, they’re also limiting supply. If you have a four- or five-handle mortgage (to say nothing of a two- or three-handle), you’re not going to happily trade it for a seven-handle, which means many existing homeowners are reluctant to sell.

Limited resale inventory is exacerbating a structural housing shortage, leaving a supply-demand imbalance despite the drag on demand from the highest mortgage rates in decades. The MBA’s mortgage applications index is the lowest since 1996, and a gauge of purchase applications is likewise waylaid notwithstanding an uptick last week.

“The 30-year fixed rate [at] 7.27% was 40bps higher than where it was in late July,” MBA VP Joel Kan remarked. “Given how high rates are right now, there continues to be minimal refinance activity and a reduced incentive for homeowners to sell and buy a new home at a higher rate.”

It’s against this familiar backdrop that market participants will assess builder sentiment, housing starts and existing home sales this week.

Recall that builder sentiment fell in August for the first time this year amid higher rates, worker shortages, rising construction costs and generalized distortions. Consensus expects another decline in September.

The NAHB gauge is a leading indicator for single-family starts, which rebounded in July, but are expected to show a small decline for August in data due Tuesday.

The bull case for builders is easy to make: Builders build houses and there aren’t enough houses. It’s so simple Warren Buffett likes it. The bear case is equally simple: Homebuilder stocks rose as much as the Nasdaq 100 through the first seven months of the year, they’ve since pulled back, a recession may be coming and mortgage rates are the highest in 20 years.

I won’t adjudicate, but it does seem reasonable to suggest that as long as resale inventory is limited and people still need a place to live, builders are a decent bet — if you can get over the psychological hurdle one needs to clear in order to buy a stock that’s still up ~30% in nine months (which, ironically, is the same kind of hurdle you need to clear to buy an actual house).

Existing home sales data due Thursday may show a small gain, but absent a big upside surprise, the story, as recapped above, will remain unchanged: People can’t buy what isn’t for sale, and when it comes to existing homes, nothing is for sale. Existing home sales have fallen in 16 of the last 18 months.

Meanwhile, buyers are getting cold feet, Redfin says. Last month, almost 60,000 residential real estate deals fell through, according to the company’s research.

As the figure shows, that was nearly 16% of all homes that went under contract, the highest share since mortgage rates topped late last year (rates are higher now) and a brief spike around the original COVID shock before that.

An agent in Reno who spoke to Redfin for Lily Katz’s latest piece summed it up. “I’ve seen more homebuyers cancel deals in the last six months than I’ve seen at any point during my 24 years of working in real estate,” the agent told Katz. “Buyers get sticker shock when they see their high rate on paper.”

Separately, but relatedly, Redfin said the median monthly mortgage payment is now $2,632. Depending on who you are — or, more to the point, how lucky you’ve been in life — that might not seem like a lot. But it is. In fact, it’s a record.