New Home Inventory Is Rising – Here’s What It Really Means

You may have seen talk online that the new home inventory is at its highest level since the crash. And if you lived through the crash back in 2008, seeing new construction is up again may feel a little scary.

But here’s what you need to remember: a lot of what you see online is designed to get clicks. So, you may not be getting the whole story. A closer look at the data, combined with a bit of expert insight, can change your perspective entirely.

Why This Isn’t Like 2008

While it’s true the number of new homes on the market hit its highest level since the crash, that’s not a reason to worry. That’s because new builds are just one piece of the puzzle. They don’t tell the whole story of what’s happening today.

To get a clear picture of how much inventory we have and how it compares to the surplus we saw previously, you need to consider both new homes and existing homes (those that were previously lived in by a previous owner).

When you combine those two numbers, it’s clear that the overall supply looks very different today than it did around the crash (see graph below):

So, saying we’re near 2008 levels for new construction isn't the same as the inventory surplus we did the last time.

Builders Have Actually Underbuilt for Over a Decade

And here’s another critical perspective you won't get from those headlines. After the 2008 crash, builders slammed on the brakes. For 15 years, they didn’t build enough homes to keep up with demand. That long stretch of underbuilding created a significant housing shortage, which we’re still dealing with today.

The graph below uses Census data to show the overbuilding leading up to the crash (in red), and the period of underbuilding that followed (in orange):

Basically, we had more than 15 straight years of underbuilding – and we’re only recently starting to climb out of that hole slowly. But there’s still a long way to go (even with the growth we’ve seen lately). Experts at Realtor.com say it would take roughly 7.5 years to build enough homes to close the gap.

Of course, like anything else in real estate, the level of supply and demand is going to vary by market. Some markets may have more homes for sale, while others may have fewer. But nationally, this isn’t like the last time.

Bottom Line

More new homes on the market doesn’t signal a housing crash. The data makes it clear that today’s inventory story is very different.

If you’d like to dig into what builders are offering in your area and what it could mean for your next move, let’s connect and talk through your options.