For the first time in over 15 years, homebuyers may have meaningful leverage over builders. Unsold inventory of newly constructed homes has swelled to 124,000 units as of late 2025—a level not seen since July 2009, when the housing market was still reeling from the Great Recession.

This inventory buildup, concentrated heavily in Sun Belt markets that boomed during the pandemic, is fundamentally reshaping the new construction landscape. Builders who grew accustomed to selling homes before foundation poured are now offering incentives that would have been unthinkable just two years ago.

The Numbers Tell the Story

The current inventory situation reflects a dramatic shift from the pandemic-era frenzy:

  • 124,000 unsold new homes — The highest since July 2009
  • 2.7 finished unsold homes per community — Up from historical norms of 1.5-2.0
  • 16+ months of supply in some markets — Far above the 6-month balanced market benchmark

The National Association of Home Builders Housing Market Index, which measures builder sentiment, has languished below the breakeven point of 50 for months, registering 39 in late 2025. Builders are clearly feeling the pressure of carrying unsold inventory while mortgage rates remain elevated.

Where the Deals Are

The inventory glut is not evenly distributed. Regional differences are stark:

High Inventory Markets (South and West):

  • Florida and Texas lead the nation in unsold builder inventory
  • Inventory levels are 50% or more above pre-pandemic norms
  • Price concessions and incentives are most aggressive in these regions
  • Phoenix, Austin, and Tampa-St. Petersburg markets are particularly soft

Tight Inventory Markets (Midwest and Northeast):

  • Inventory remains 30-50% below pre-pandemic levels
  • Builders maintain stronger pricing power
  • Incentives are more modest
  • Land constraints and zoning restrictions limit new construction

"We're seeing a tale of two markets. Sun Belt builders who ramped up aggressively during 2021-2022 are now sitting on spec homes they can't move at original asking prices. Meanwhile, inventory-constrained markets in the Northeast continue to see multiple offers on new listings."

— Lance Lambert, Co-founder, ResiClub Analytics

Builder Incentives Are Getting Serious

When builders have carrying costs on unsold inventory, they get creative. Current incentives in high-inventory markets include:

  • Rate buydowns: Builders paying to reduce mortgage rates by 1-3 percentage points for the first 1-3 years, or permanently
  • Closing cost coverage: Paying 3-6% of purchase price toward buyer's closing costs
  • Price reductions: Direct cuts to base prices, often unadvertised
  • Upgrade packages: Free premium finishes, appliance upgrades, landscaping
  • Commission bonuses: Higher payouts to buyer's agents who bring qualified purchasers

Major builder Lennar reported offering incentives totaling 13% of home sale prices in recent quarters—up from just 1.5% during the pandemic boom. On a $400,000 home, that's $52,000 in effective savings.

A Historic Price Reversal

Perhaps the most remarkable development: for the first time in more than 50 years, new construction has become more cost-effective than buying an existing home on a price-per-square-foot basis.

The new construction price premium has shrunk to a record-low 10.2%, down from roughly 40% just a decade ago. When builder incentives are factored in, new homes in many markets are now competitively priced with—or cheaper than—resale homes.

This reversal reflects both the inventory pressure on builders and the "rate lock-in" effect keeping existing homeowners from listing. With millions of homeowners sitting on sub-4% mortgages, the resale market remains starved for listings even as new construction floods the market.

What Buyers Should Know

If you're considering new construction in 2026, here's how to maximize your position:

  1. Target markets with high inventory: Florida, Texas, Arizona, and Nevada offer the most buyer-friendly conditions
  2. Negotiate aggressively: Everything is on the table—price, rate buydowns, upgrades, closing costs
  3. Consider move-in ready homes: Completed spec homes often carry the deepest discounts as builders face carrying costs
  4. Compare to-be-built vs. completed: Building from scratch may offer customization but less leverage
  5. Get multiple bids: Visit competing communities to gather ammunition for negotiations
  6. Ask about unadvertised incentives: Published prices often don't reflect actual transaction terms

The 2026 Outlook

Most analysts expect elevated inventory levels to persist through 2026. Morningstar projects housing starts to decline 3% as builders work through existing supply rather than breaking ground on new projects.

The National Association of Realtors is more optimistic, forecasting home sales could jump 14% in 2026 as rate buydowns make new homes more accessible. The truth likely lies somewhere in between—but either scenario favors buyers who've been waiting on the sidelines.

For those priced out during the pandemic frenzy, 2026 may offer the best opportunity in years to purchase a brand-new home with meaningful concessions. The window won't stay open forever—builder inventory will eventually normalize—but for now, the leverage has shifted.