George Frey/AFP via Getty ImagesBuyers who have waited patiently for the housing market to improve see little relief in sight.New construction data shows things are still moving in the wrong direction.Sign up for First Trade, Business Insider's daily markets newsletter.When mortgage rates hit multi-decade highs in 2023, the prevailing wisdom was that the housing market would eventually become more affordable. Buyers who stayed patient would be rewarded. The market would self-normalize.Three years later, prospective buyers are still waiting for that relief. And there are recent signs of a housing market going in the wrong direction.The latest bad news came on Tuesday, when data showed new residential construction fell 12.4% in July. Not to be outdone, single-family housing starts fell to their slowest pace since 2022.For a major reason why, look no further than the 30-year mortgage rate, which has stayed stubbornly high for the past few years. It did fall below 6% early this year, but the Iran war quickly derailed hopes for further declines. As oil prices surged, stoking fears of inflation, any optimism around cheaper borrowing evaporated.The 30-year Freddie Mac mortgage rate is down just moderately from its 7.8% peak reached in October 2023 — a far cry from the COVID-era low of 2.7%.Add in home prices that have been on a steady chug higher since COVID-era lows, and you have a difficult mix of forces that all point towards the same end result: you not getting a house. (Disregard the seasonal peaks and valleys in the chart below. Instead note the multiyear upward trend.)Taken together, these headwinds recently prompted the macro research firm Capital Economics to forecast the slowest year for home sales since 2011. What's more, the firm also predicts that mortgage rates will stay above 6% for another two years. So much for near-term relief.The housing-market gridlock is also spilling into the home-improvement industry. On Tuesday, Home Depot posted an earnings beat, but its stock fell as CFO Richard McPhail acknowledged that "frozen housing conditions" are impacting large-scale home projects — aka the ones most linked to homebuyers.A slowdown in construction risks making affordability even worse. Fewer homes being built means less supply, which could keep upward pressure on prices.That leaves buyers with few good options. Mortgage rates remain high, home prices haven't meaningfully declined, and there's little reason to expect either to change dramatically in the near term.For buyers who decided to wait out the housing market three years ago, patience hasn't paid off. And there's little evidence yet that it will anytime soon.Read the original article on Business Insider
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