Builders Are Stuck With Too Many Houses as US Buyers Pull Back

In an American housing market that for years has been plagued by too little inventory, builders are suddenly finding themselves with a glut of unsold homes.

This year’s surge in mortgage rates tossed buyers to the sidelines. The waitlists for new houses are gone. And new-home sellers such as Kevin Brown, who works just south of Houston, are on the front lines of a massive shift.

While Brown used to have back-to-back appointments, buyers now just trickle in to his Saratoga Homes sales office. Meanwhile, he’s got 55 houses under construction and five that are complete, all without deals.

“There’s a bit of pressure on us,” Brown said. “Builders have got to hit goals and make their profit, and they don’t like inventory just sitting on the ground.”

An abrupt halt to the pandemic housing boom has left builders that started construction months ago scrambling to adapt. The US supply of new homes relative to sales in June was the highest since the midst of the last crash in 2010. And by early July, buyer traffic to homebuilder websites and sales offices had plunged to the lowest level for the month since 2012, according to a survey of builder sentiment from the National Association of Home Builders.