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Speaking to investors last week, Lennar co-CEO Jon Jaffe said that the spring 2025 selling season for America’s second-largest homebuilder is off to a slower-than-normal start.
“We do not see the seasonal pickup typically associated with the beginning of the spring selling season,” Jaffe said. “So we continue to lean into our machine focusing on converting leads and appointments and adjusting incentives as needed to maintain sales pace. These adjustments came in the form of mortgage rate buydowns, price reductions, and closing cost assistance.
Last quarter, Lennar spent the equivalent of 13% of home sales on buyer incentives—up from 1.5% in Q2 2022 at the height of the pandemic housing boom. A 13% incentive on a $400,000 home translates to $52,000 worth of incentives.
This weaker housing demand environment is causing unsold inventory to tick up. Indeed, since the pandemic housing boom fizzled out, the number of unsold completed new single-family homes in the U.S. has been rising:
February 2018: 63,000
February 2019: 75,000
February 2020: 77,000
February 2021: 39,000
February 2022: 31,000
February 2023: 70,000
February 2024: 88,000
February 2025: 119,000
The February figure (119,000 unsold completed new homes) published this week is the highest level since July 2009 (126,000).
Let’s take a closer look at the data to better understand what this could mean.
To put the number of unsold completed new single-family homes into historic context, we created a new index: ResiClub’s Finished Homes Supply Index.
The index is one simple calculation: The number of unsold completed new single-family homes in the U.S. divided by the annualized rate of U.S. single-family housing starts in the U.S.
A higher index score indicates a softer national new construction market with greater supply slack, while a lower index score signifies a tighter new construction market with less supply slack.
If you look at unsold completed single-family new builds as a share of single-family housing starts (see chart below), it still shows we’ve gained slack; however, it puts us closer to pre-pandemic 2019 levels than the 2008 housing bust.
While the U.S. Census Bureau doesn’t give us a greater market-by-market breakdown on these unsold new builds, we have a good idea where they are based on total active inventory homes for sale (including existing homes) that spiked above pre-pandemic 2019 levels. Most of those areas are in the Sun Belt around the Gulf.
“Some builders are facing pricing pressure—especially in key Florida and Texas markets, where resale supply is also well above pre-COVID norms,” Dillan Krieg, an analyst at John Burns Research and Consulting, recently wrote on LinkedIn.
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Big picture: There’s greater slack in the new construction market now than a few years ago, giving buyers some leverage in certain markets to negotiate better deals with homebuilders.
