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The long-standing view among most housing analysts is that homebuilders compete against resale inventory—something that fell to historic lows as the market overheated during the pandemic housing boom.
In the current environment, active housing inventory is finally on the rise in most markets. It isn’t happening because of a flood of listings—new listings are still quite low. Instead, strained housing affordability has slumped housing demand, and homes are taking longer to sell. Thus, active inventory is building.
So how much competitive pressure is rising resale housing inventory putting on homebuilders? To find out, ResiClub reached out to Zonda for its latest builder survey.
According to U.S. homebuilders surveyed by Zonda in July 2024:
- 56% are seeing “very little competition” from the resale market
- 27% are seeing “a little competition” from the resale market
- 14% are seeing “moderate competition” from the resale market
- 1% are seeing “strong competition” from the resale market
- 1% are seeing “very strong competition” from the resale market
On a nationally aggregated basis, U.S. active inventory being up 37% year over year hasn’t yet created a lot of competitive pressure for builders.
“In spite of all the blur and the affordability and the noise and the inventory and everything in the media, underneath that, people want to be homeowners, and so we’re seeing that,” KB Home CEO Jeffrey Mezger recently told ResiClub. “We sold 5.5 homes a month per community [last quarter]—it’s one of the highest levels in the company’s history.”
The biggest exceptions for homebuilders are Florida and Texas, where inventory has risen the most.
In Florida and Texas, that pressure is starting to raise eyebrows and slow some builders’ sales (as you can see in the June 2024 survey result and the May 2024 survey result).
The fact that Florida and Texas homebuilders are seeing more competition from resale makes sense. Many Florida and Texas markets are the areas of the country where housing inventory has jumped above 2019 pre-pandemic levels.
One factor is that some pockets of Texas and Florida experienced even greater home price growth during the pandemic housing boom. Once pandemic-fueled migration slowed, it became an issue in places like Punta Gorda and Austin. Property tax and home insurance hikes only added to the affordability pressure.