New SF Home Inventory Continues to Rise

Since 1965, there have been only four instances where new single-family home inventory rose above 400,000 units.

Each of these instances preceded a recession, though the outcome of the current situation remains unknown.

Will we encounter a recession in 2025?

Below is a chart showcasing the annualized figure for new single-family homes sold and the monthly figure for new single-family homes for sale.

As of January 2025, there are 496,000 new single-family homes for sale. Over the last sixty years, this level of supply has been relatively uncommon, as the national inventory typically ranges between 200,000 and 400,000 units.

Let’s take a look at some past examples to see if they provide insight into the current situation:

1973: The housing market faced challenges due to economic stagflation and rising interest rates. This period saw a significant increase in new home inventory, which preceded a recession from 1973 to 1975.

1980: High inflation and interest rates led to a housing downturn. The increase in inventory was followed by a recession from 1980 to 1982.

2008: The housing bubble burst, leading to a severe financial crisis. Rising inventory levels were a precursor to this event.

Current Situation: With inventory levels once again exceeding 400,000 units, concerns about a potential recession in 2025 have emerged. The current economic environment, marked by high interest rates and inflation, could strain housing demand and contribute to a downturn.