Inside the 2025 housing market: inventory growth, affordability pressure, and what comes next

Ivy Zelman noted, while affordability remains stretched, a surprising development has been the slow but steady rise in existing home inventory.

 “If you go into certain parts of the country, inventories like in the state of Florida and in Texas are up probably roughly 50% relative to where they were pre-COVID.”

—[06:45]

Logan Mohtashami added that despite mortgage rates hovering above 6.65% for much of the year, purchase applications and pending home sales have shown unexpected strength.

 “If someone told me rates would stay this high and we’d have positive purchase application data year over year…I would have not taken that bet.”

—[13:50]

Builders are feeling the pressure

While homebuilders have benefited from limited resale inventory over the last few years, the panel agreed that the dynamic is shifting. Ivy Zelman added that due to margins, builder availability to by down rates may start to fade.

 “Gross margins are now sub-20% for many builders.”

—[06:07]

Dale Wettlaufer echoed that rising costs — especially land and development expenses from years past — are just now hitting builder balance sheets.

 “Today’s COGS for long lead-time builders reflect development costs from four years ago.” — [09:58]

Broader market trends:

• Consumer confidence is becoming a bigger risk factor than rates alone.
• Builders may slow starts and renegotiate land options.
• Affordability constraints are unlikely to ease soon without meaningful changes at the local policy level.

As Zelman bluntly put it:

“We have a shortage of affordable homes — not a shortage of homes, period.”

—[38:36]

Download the full transcript of the event here.