The situation: The housing market has been idling for years, but the past 12 months have been its most motionless stretch yet, hampered by an affordability crisis that has sidelined many potential buyers.

• Pending sales have barely shifted—dropping to 477,141 in January and inching up to just 502,003 last November, the narrowest 12-month range since 2013, per Redfin. New listings and prices are similarly stagnant.
• While home prices rose just 1.2% YoY in September, they’re still about 50% higher than five years ago, per Cotality, leaving 75% of the top 100 housing markets overvalued.
• The lack of affordable inventory has driven the share of first-time home buyers to a record low of 21% and pushed up their average age to an all-time high of 40, per the National Association of Realtors.

There’s little relief in sight.

• Tariffs and the crackdown on immigration are inflating construction costs.
• Interest rates remain elevated, and the odds of a December cut look increasingly like a coin flip, per Bloomberg.
• Consumer sentiment has fallen across age, income, and political affiliation.

Why it matters: The frozen market is creating a K-shaped environment for retailers—pressuring home-improvement chains while allowing certain premium and digitally savvy players to outperform.

William Bastek, Home Depot’s executive vice president of merchandising, noted on this week’s earnings call that while big-ticket comp transactions over $1,000 grew 2.3% in Q3, there’s “softer engagement” in larger discretionary projects typically financed by customers.

The sluggish environment drove both Home Depot and Lowe’s to lower guidance.

• Home Depot cut its full-year adjusted EPS outlook to a 5% decline, down from a 2% decline. It now projects 3.0% sales growth and slightly positive comps, compared with its earlier forecast of 2.8% growth and a 1% comp increase. The updated forecast includes about $2 billion in incremental revenues from GMS, the building-products distributor acquired earlier this year, which wasn’t included previously.
• Lowe’s reported 3.2% Q3 sales growth but narrowed its adjusted EPS guidance to $12.25, the lower end of its prior $12.20–$12.45 range, and it now expects comp sales to be flat YoY, versus its earlier view of flat to up 1%. While it raised its full-year sales outlook to $86 billion—up from its $84.5 billion to $85.5 billion range—like Home Depot, the lift comes from its recent acquisition of Foundation Building Materials.

Pushing past the headwinds: Wayfair and Williams-Sonoma managed to push through stiff housing-market headwinds in Q3.

• Wayfair delivered solid gains as its focus on value, convenience, and trust drove 5.4% order growth, its second straight quarter of mid-single-digit gains. The retailer is successfully pulling levers to boost spending: Its AI-powered inspiration engine, Muse, creates photorealistic, shoppable room scenes to engage lower-intent shoppers and feed into the new Discover tab, turning inspiration into action.
• Williams-Sonoma raised its margin guidance for the year while confirming its net-revenue goal, after reporting 4.4% sales growth and 4% comp growth. The company’s results underscore the K-shaped economy: Comp sales for its higher-end Williams-Sonoma brand rose 7.3%, while Pottery Barn increased just 1.3%.

However, even the companies performing well aren’t immune to broader pressures as the Trump administration rolled out tariffs on upholstered furniture, cabinets, and lumber in October.

Our take: A K-shaped economy is pulling housing-related retailers in opposite directions. On the upper track, Williams-Sonoma is riding steady demand from shoppers insulated from affordability pressures. On the lower track, Home Depot and Lowe’s are absorbing the fallout from a market where first-time buyers are sidelined, big projects are deferred, and financing is a tougher sell. That divide isn’t likely to narrow until affordability and confidence return, neither of which appears poised for a quick turnaround.