Headlines are highlighting the current inventory of new homes, indicating we're back to levels not seen since 2009. You might be reading this and thinking, “Oh no, not again.” This reaction likely stems from your memories of the housing crash in the late 2000s and concerns about us making the same mistakes.

Before you let fear set in, keep in mind that headlines are often just clickbait. More often than not, they can scare you instead of providing clear information. They don’t always include the full context you might need. So, let’s pause and take a closer look at what the actual data indicates.

Why This Isn’t Like 2008

Even though the number of new homes available on the market is at its highest level since 2009, there’s no need to worry about it.

When you look at the graph, it’s pretty obvious that 2009 wasn’t the peak of oversupply. The highest point actually occurred earlier, in 2007-2008. In fact, 2009 marked the beginning of a decrease in the number of new homes being constructed.

The overbuilding that led to the housing crash took place in the years before 2008, not in 2009. By 2009, construction had already started to slow down. So, when we say we've reached 2009 levels, it doesn't mean we're overbuilding like we did before.

Builders Have Actually Underbuilt for Over a Decade

Here's some additional information to support this. After the crash, builders significantly reduced their production. Consequently, they constructed far fewer homes than what the market actually required. This issue persisted for over a decade. That prolonged period of underbuilding has resulted in a significant housing shortage that continues to be a challenge today.

The graph below, based on Census data, illustrates how many new homes were constructed each year over the last 52 years. You can easily spot the overbuilding before the crash, shown in red, followed by a phase of underbuilding, marked in orange.

Today's scenario is distinct. Builders aren't constructing excessively; they are simply working to meet demand.

The supply and demand in real estate can really differ from one market to another. Some areas have a lot of new homes, while others have fewer. However, on a national scale, there’s no reason to be concerned. This situation is not like what we experienced in the past.

Bottom Line

The rise in newly built homes on the market isn’t a cause for concern; it actually indicates that builders are catching up after years of not meeting demand. If you're interested in discussing the local market trends, feel free to reach out.