HAVING FULLY recovered from the crash of 2007-2008, the U.S. housing market is cooling a bit. Prices rose at a 5.2 percent annual rate in November, down from 5.3 percent in October. Economists generally expect further deceleration this year, and a recent Goldman Sachs report identifies three main causes: an uptick in mortgage rates, the failure of wage growth to keep pace with housing price growth and the 2017 tax law, which reduced the mortgage interest deduction.

Is this good or bad news? A lot depends on whether you’re buying or selling. For the U.S. economy as a whole, the prospect of a smoothing out in the boom-bust cycle could be a positive sign — evidence that the various regulatory reforms enacted after the Great Recession are working. The last piece of unfinished business is, however, housing-related: resolving the status of Fannie Mae and Freddie Mac, the two giant entities that provide mortgage liquidity by packaging home loans into securities and selling them to investors. Taken over by the federal government in 2008, they remain there still, despite repeated legislative attempts at reform. The lack of a Fannie-Freddie fix creates nagging uncertainty for would-be investors in all aspects of the housing business.

The politics of reform have proved intractable, however, with discord among affected interest groups so sharp that they have prevented even a unified Republican government from pushing through a bill over the past two years. The latest stir was caused by leaked remarks last month from Joseph Otting, Fannie and Freddie’s acting regulator, who suggested at an internal agency meeting that the Trump administration was about to propose a plan to end government control. Some on Wall Street interpreted that to mean the administration would return Fannie and Freddie to their existing shareholders, who are now mostly hedge funds that purchased the entities’ beaten-down stock after the crash and have been agitating for this form of “privatization” ever since. This is the one proposal that policymakers should rule out once and for all: It would hand a windfall to speculators while resurrecting the old, failed business model that enabled Fannie and Freddie to gamble for maximum private profits, with taxpayers on the hook for losses.

The White House quickly denied that “decisions have been made on any reform plan” and promised to work with Congress — which now means working with a Democratic House, and its financial services committee chair, Rep. Maxine Waters (D-Calif.). Perhaps the liberal Ms. Waters and the Trump administration’s proposed point man for housing, Mark A. Calabria, can have a Nixon-goes-to-China moment. Sen. Mike Crapo (R-Idaho) weighed in Friday with a revised version of a compromise plan he offered previously that would assign more responsibility for funding 30-year mortgages to the private sector, while preserving a government backstop for truly catastrophic losses. The sooner the politicians get to yes, the sooner the housing market can complete its healing process.

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