The news out this week is that D.R. Horton is acquiring SK Builders. So yes, the nation’s largest builder is expanding its presence in the fast-growing South Carolina markets. Despite what President Trump has to say about builders stepping up their game, the question those of us in the biz are asking is, “Are homebuilders really stalling, or are high rates to blame?”
For years people have pointed out inventory issues, but those seem to be behind us. In the first quarter of this year, unsold home inventory peaked at 507,000, the highest since October 2007! As of July 2025, there were 121,000 completed single-family homes sitting unsold in the U.S., which is a 20 percent increase from 2024 and the most since 2009. By August, there was an inventory of 490,000 new homes for sale.
That means inventory is available, new homes are waiting to be purchased, but they sit, unoccupied. According to some housing analysts, the president should set his sights on interest rates or lenders. Interest rates, not the fault of lenders, are simply too high for some potential buyers right now, leaving thousands of homes unsold. Zillow speculates the country is 4.7 million units short in its July 2025 analysis, while the National Association of Realtors (“NAR”) estimates a 5.5-million-unit shortage. So, if there are over 100,000 finished homes waiting to be sold, how and why is the country millions of homes “short”?
Few disagree that we’ve seen years of underbuilding. With 70 million millennials potentially searching, the U.S. has not built enough homes to keep up with population growth or the high demand from millennials entering their prime homebuying years. Some unsold homes sitting vacant are in areas with little demand or declining populations, making them difficult for owners or builders to sell.
But there are other things going on. Remember when investors soaked up the “foreclosure tidal wave” of 2011? Investors purchase a significant portion of available homes, especially from builders, removing them from the market for individual buyers and creating a shortage. These purchases reached record highs earlier in 2025 when data shows that investors bought approximately 30 percent of single-family homes (both new and existing) on the market. Once investors (often “mom and pop”) buy these homes, often directly from builders, they rent them out rather than making them available for the public to buy. Not only that, but the rising cost of construction materials, labor, and financing results in elevated home prices, many of which buyers find unaffordable.
The bottom line is, yes, there is some unsold inventory. But America still needs more affordable homes. A flood of new supply from homebuilders would theoretically help lower prices, all else equal. The question is whether these companies can do that profitably and what the federal government can do to help. By urging major housing financiers Fannie Mae and Freddie Mac to pressure big homebuilders, President Trump aims to kick the housing market into gear. How can Freddie and Fannie, government-sponsored enterprises ("GSEs") exert pressure?
The Federal Housing Finance Agency (“FHFA”), an independent government agency that supervises GSEs like Fannie Mae and Freddie Mac to ensure a fair U.S. housing finance system, will likely turn to their affordable housing goals to jumpstart building. The industry knows that the FHFA creates goals for Fannie Mae and Freddie Mac to provide affordable housing by purchasing mortgages for minority and low-income borrowers, and by renting to low-income families. The goals (updated every three years by the FHFA) help ensure the GSEs focus on underserved markets.
When a GSE meets its Affordable Housing Goals, it can access better financing terms. This provides more incentive for the lender to finance even more affordable housing. Pushing Fannie Mae and Freddie Mac to pressure homebuilders may involve FHFA policy changes, which can come in many forms:
By encouraging affordable housing and adjusting housing goal benchmarks, and adjusting goals, the FHFA can push GSEs to purchase more loans for affordable properties and new construction. Adoption of different credit score models (like VantageScore) expands credit access to a wider group of potential buyers. Additionally, the FHFA can streamline the application process for developers to receive Federal Home Loan Bank (the other GSE under FHFA) funds for affordable housing projects.
The FHFA can support the financing of manufactured homes, an important source of affordable housing. This includes the purchase of “construction-to-permanent” loans that cover the cost of new manufactured homes, land, and installation. However, many housing industry experts don’t see the lack of newly built homes as a supply problem; rather, it’s a zoning and permit issue. And there isn’t much GSEs can do about that since that is a local issue.
David Engle with Stansberry Research writes, “According to the National Association of Home Builders (“NAHB”), government regulations at all levels accounted for almost 24 percent of the final price of a new single-family home and 40 percent of the cost of a multifamily home in 2021. A 2022 survey also revealed that 83 percent of developers facing project delays cited permitting issues as the reason.
“In most cases, however, zoning laws and building codes exist for good reasons: to manage traffic, protect the environment, and prevent overcrowding. But some laws and regulations are so outdated that reform is likely the only way to resolve the crisis and accelerate development.”
As the debate between homebuilders and policymakers rages on, one thing is clear: housing prices are sky high, and the pressure is on to increase the nation’s housing supply. Between high list prices, high mortgage prices (even if they did drop this month), and how debt-ridden consumers are… there’s not much incentive for people to buy a home these days. Which means there’s not much room for homebuilders to profit.