New single-family home sales came in at a seasonally adjusted annual pace of 684,000 in August, up about 6 percent from July. That is a solid month, and it is tempting to read it as proof that the housing market has found its footing. The mechanism underneath that number deserves more scrutiny than the headline does.

The average rate on a 30-year mortgage sits at 7.03 percent as of late September. That rate does not sit in isolation. It lands on top of home prices that have been carried higher by years of tight supply, which means the monthly payment on a median new home is in a different world from what buyers faced in 2019 or 2020. The purchase decision has changed structurally, not just at the margin.

Consider what a 7 percent mortgage actually costs a buyer. On a $450,000 loan, the principal and interest payment alone runs about $2,994 a month. At 4 percent, the same loan cost $2,148. That is an $846 monthly difference, which over a year is more than $10,000 in after-tax cash that a household cannot spend elsewhere. Buyers who can absorb that are not the same population as buyers from four years ago. They tend to be older, wealthier, or equity-rich from a prior home sale.