US housing’s at a crossroads of sorts.

Rates have seemingly stabilized, and may be biased to move a bit lower in 2025 if US growth cools at the margins (and assuming Treasurys don’t succumb to some manner of pernicious, term premium-driven selloff that spills over into financing costs for homes).

Borrowers are by now resigned to 6%-ish rates and understand the odds of seeing four-handle mortgages again are quite low outside of a US recession, which would present its own set of problems for would-be buyers. At the same time, resale inventories are improving, and there’s no shortage of new construction.

And yet, rates still seem punitive to first-time buyers, many whom are too young to remember the last time money wasn’t free. And prices are stratospheric. So… limbo it is.

Wednesday’s updates — MBA mortgage apps and the government’s starts and permits release — were fittingly ambiguous. The average 30-year fixed rose 8bps to 6.75%, the first increase in four weeks.

As a quick reminder, rates rose steadily alongside a selloff in Treasurys in the lead-up to the US election, as markets anticipated a Trump win and a possible “red sweep.” For many in the housing market, it was a bitter pill: The Fed had just delivered an outsized rate cut, and yet mortgage rates rose.

Over the last several weeks, rates receded a bit as markets took comfort in the notion that Scott Bessent will prove to be a reasonably capable steward of America’s finances. The increase over the last week erased a third of that relief, and here we are loitering at almost the exact same levels on the MBA’s index that prevailed on October 30, the week before the vote.

Overall applications slipped, the MBA said, but in a testament to the idea that buyers are resigned to what still counts as a very onerous affordability situation, purchase activity managed a modest increase on a seasonally adjusted basis. “Buyers remained active in the purchase market, helped by gradually improving inventory conditions and a more positive outlook on the economy and job market,” MBA VP Joel Kan remarked.

Meanwhile, single-family housing starts rose 6.4% in November, according to the government’s tally. The increase was due entirely to a jump in the south, America’s biggest homebuilding region, where construction recovered from the impact of two hurricanes.

Single-family starts fell in every other region, though, and overall starts unexpectedly showed a decline, weighed down by a 23% plunge in multifamily construction.

Permits rose, but those for single-family projects were effectively unchanged. (If you’re sensing a lot of ambiguity — “but,” “though,” etc. — you’re not wrong.)

Meanwhile, under-construction dwellings slipped to just 1.43 million (annualized), the least since August of 2021, although it’s worth noting that the series is still perched above where it stood at the 2006 peak. As the figure below shows, single-family, under-construction homes fell to the lowest since March of 2021.

To reiterate: There’s no shortage of finished, new construction in America. The inventory shortage is on the resale side.

In light of what it’s probably fair to call a new home glut, builders are stuck offering incentives of various sorts to entice stretched buyers and that’s eroding margins, which helps explain why builder sentiment remains subdued, even as the outlook has ostensibly improved.

According to a separate government report, for-sale inventory of new, one-family homes in America is the highest since January of 2008.