INDIANAPOLIS (WISH) — Home builders are dealing with a growing challenge: an oversupply of newly constructed homes. According to a report from Business Insider, builders are now holding onto the largest inventory of newly built homes since 2009.

Despite having a surplus of properties ready to hit the market, many of these homes may not be available to the average buyer anytime soon.

During a recent conversation on “Daybreak,” Jeremy Jenkins sat down with Business Insider senior reporter James Rodriguez to dig deeper into the issue.

The build-up to the current market

Rodriguez explained that the housing market’s current state can be traced back to the pandemic. Builders ramped up construction in response to strong demand, as existing homes were hard to come by. But just when it seemed mortgage rates were on the decline last summer, rates spiked again, now hovering around 7%.

“This is quite a jump compared to the 2-3% rates that were common during the height of the pandemic,” Rodriguez said. “That’s created a tough situation for buyers trying to afford homes right now.”

Currently, around 180,000 finished homes are sitting on the market, a 48% increase from the same time last year. Yet, instead of seeing everyday buyers snapping up these homes, small to mid-sized investors are stepping in. These investors are looking to capitalize on potential rental income, leaving traditional buyers at a disadvantage.

What Does This Mean for Homebuyers?

For those currently navigating the housing market, there are still opportunities — especially in regions like the Sun Belt, according to Rodriguez.

“It’s challenging to predict where mortgage rates will go, but homebuilders are willing to work with buyers. Many are offering incentives like mortgage rate buy-downs, where they pay upfront to help lower your interest rate,” Rodriguez said.

While builders may not be drastically reducing prices, they’re offering creative ways to make purchasing more manageable, especially for first-time buyers.

Is There a Solution in Sight?

When asked if there’s a realistic solution on the horizon, Rodriguez was cautiously optimistic.

“Homebuilders tend to operate in cycles. They might slow down construction to manage their inventory, but what’s really needed now is stability in mortgage rates,” he said.

One of the main obstacles right now is that homeowners who locked in low mortgage rates a few years ago are reluctant to sell. This has limited the inventory of existing homes available to new buyers. Rodriguez noted that next spring, typically the busiest season for real estate, could be a key indicator of where the market is heading.

“If we can get more transactions going, it would be a positive sign for everyone involved,” he added.

As the market remains uncertain, potential buyers should keep an eye on mortgage trends and builder incentives as they navigate the current landscape.

For more details, click here for James’ full article.