U.S. Housing Market Sounds Alarm as New Home Inventory Soars to Highest Level Since Great Recession

September 2 — Data released by the U.S. Census Bureau and the Department of Housing and Urban Development reveal that in July, the stockpile of unsold newly built homes climbed to levels not seen since the most acute phase of the 2007 financial crisis.

In July, 121,000 new homes were listed as available, compared with 103,000 in the same month of 2024, surpassing July figures from every year since 2009, when 126,000 units awaited buyers.
According to the joint report, sales of newly built single-family residences slowed to an annualized pace of 652,000 units in July, an 8.2% decrease from July 2024. Existing home sales also weakened, with the National Association of Realtors reporting that the previous year’s transaction volume was the lowest since 1995.

Industry analysts attribute the market’s softness to several interrelated factors. Prior to the 2024 presidential election, many economists expected that moderating inflation and Federal Reserve rate cuts would spur home purchases. Instead, tariff measures introduced under the Trump administration have contributed to higher-than-anticipated inflation and mortgage rates, dampening consumer confidence.

In February, the Fannie Mae Home Purchase Sentiment Index recorded its first year-over-year decline since 2023, driven largely by borrower concerns about elevated mortgage costs. By June, five of the index’s six subcomponents had fallen further, reflecting persistent unease over job security, financing terms, home values, sales prospects and household incomes.

Experts note that steep prices and borrowing costs are creating a “lock-in effect,” preventing many first-time buyers from entering the market while discouraging existing homeowners with low-rate mortgages from trading up. Realtor.com economic research analyst Hannah Jones observed that widespread economic uncertainty has led many consumers to postpone major financial decisions.

For homebuilders and sellers, these conditions are troubling, as it remains unclear whether affordability will improve or economic sentiment will strengthen in the months ahead. Yet buyers may find some relief in the current oversupply: Census Bureau and HUD data show the median sales price of a new home fell by 5.9% last year to $403,800. Even so, housing expenses remain substantially higher than they were before the recent surge in demand.

Regional dynamics vary: markets in the Northeast, Midwest and Southern California continue to see robust demand and rising prices, whereas many areas in the South and Southwest have experienced price declines. Overall, however, the percentage of consumers who believe now represents a good time to purchase a home has increased.