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Speaking to analysts last month, Lennar co-CEO Jon Jaffe affirmed what other giant homebuilders have been saying all year: This year’s housing market was weaker than they expected.
“All of the markets we operate in experienced some level of softening [this quarter]. Even in our strongest performing markets, buyers needed the assistance of incentives. Incentives will vary across the different markets, but primarily in the form of assistance with mortgage rate buydowns,” Jaffe said. “The markets that experienced more challenging conditions [for Lennar] during the quarter were the Pacific Northwest markets of Seattle and Portland; the Northern California markets of the Bay Area and Sacramento; the Southwestern markets of Phoenix, Las Vegas, and Colorado; and some Eastern markets such as Raleigh, Atlanta, and Jacksonville.”
To attract sidelined buyers, in Q2 2025, Lennar—America’s second-largest homebuilder—spent an average of 13.3% of the final sales price on sales incentives, such as mortgage rate buydowns. At that incentive rate, a home with a $450,000 sticker price would come with nearly $60,000 in incentives. According to John Burns Research and Consulting, that’s the highest incentive level Lennar has offered since 2009—and it’s significantly higher than Lennar’s cycle low in Q2 2022, when it spent 1.5% of the final sales price on sales incentives.
The longer we’ve stayed in this softer housing demand environment—which has been the case since mortgage rates spiked and the pandemic housing boom fizzled out in summer 2022—the more that unsold new-build inventory has ticked 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:
May 2018 —> 59,000
May 2019 —> 79,000
May 2020 —> 74,000
May 2021 —> 33,000
May 2022 —> 36,000
May 2023 —> 65,000
May 2024 —> 93,000
May 2025 —> 119,000
The May figure (119,000 unsold, completed new homes) published last 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 U.S. new single-family homes divided by the annualized rate of U.S. single-family housing starts. 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 Great Financial Crisis 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 where total active inventory homes for sale (including existing) has spiked above pre-pandemic 2019 levels. Most of those areas are in the Sun Belt around the Gulf.
Builders are facing pricing pressure—especially in pockets of the Sun Belt where active housing inventory for sale is well above pre-pandemic 2019 levels.
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