All roads into and out of the recession run through the housing market. During the summer, that road seemed to be heading toward recovery. These days, it seems to be headed back toward hard times. A reversal would have big implications for the economy and, by extension, the policies now being pursued by the administration, Congress and the Federal Reserve.

The Commerce Department reported this month that new-home construction fell sharply in October. That led many economists to reduce their estimates for economic growth in the current quarter.

Even this month’s other seemingly good news had a dark lining. Reports from industry and government showed that sales of both new and existing homes rose in October. But much of that was driven by buyers who rushed to claim...