You might have noticed people online mentioning that new home inventory is at its highest point since the last big crash. If you remember the 2008 crash, the idea of seeing new construction ramping up again can feel a bit unsettling.

Just keep in mind that a lot of what you come across online is made to grab your attention. That means you might not be seeing the whole picture. Taking a deeper look at the data and hearing from an expert can totally change how you see things.

Why This Isn’t Like 2008

Yes, there are more new homes on the market than we've seen since the crash, but that shouldn’t cause concern. New builds are only one part of the overall housing picture and don’t fully reflect what’s going on in the market right now.

To really understand how much inventory is available and how it stacks up against the surplus we had before, you need to consider both new homes and existing homes—those that were previously lived in by someone else.

When you put those two numbers together, it’s clear that the overall supply today is very different from what it was around the crash (see graph below).

Saying we're close to 2008 levels for new construction doesn’t mean we have the same inventory surplus we had back then.

Builders Have Actually Underbuilt for Over a Decade

Here’s something you might not hear in the headlines: After the 2008 crash, builders really slowed down and didn’t keep up with how many homes people needed. For about 15 years, there just weren’t enough new homes built, and that shortage is still affecting the market today.

The graph below uses Census data to highlight how there was too much building before the crash (shown in red) and then a stretch of not enough building afterward (shown in orange).

For over 15 years, we didn't build enough homes to meet demand, and we're just now beginning to make up for that shortfall. Even with the recent growth in construction, there's still a lot of ground to cover. According to experts at Realtor.com, it would take about 7.5 years of steady building to fully close that gap.

Real estate markets can be pretty different depending on the area—some places have a lot of homes for sale, while others have fewer. But across the country, the situation right now isn’t the same as what we saw last time.

Bottom Line

Even though there are more new homes on the market right now, it doesn’t mean we’re approaching a market crash. The data tells us that the current inventory situation is actually quite different from what might lead to one.

If you have any questions or want to chat about what builders are working on around here, feel free to reach out.