Unsold Inventory Reaches 18 Months as Supply Exceeds Demand
Unsold housing inventory in India increased to approximately 18 months in the first quarter of calendar year 2026, driven by residential supply consistently outpacing demand, according to a report by Anand Rathi. The metric, measured as months of sales, indicates the time needed to sell existing stock at the current sales pace. The report highlights that residential project launches remained elevated due to easy funding availability, capital-light land deals, and optimism from the previous growth cycle. Consequently, unsold inventory rose from nearly 14 months in CY24 to about 18 months in Q1CY26.
Sales Volume Decline Amid Value Growth
Housing sales moderated from a peak of about 4.8 lakh units in CY23 to nearly 4 lakh units in CY25, reflecting a negative compound annual growth rate (CAGR) of around 9 percent. Despite this volume decline, residential value grew from Rs 4,870 billion to Rs 6,006 billion over the same period, revealing a clear value-volume dichotomy, the report stated. The slowdown is attributed to a high base effect, affordability pressures, disruptions in the IT sector, and wealth erosion following stock market corrections. However, the report emphasizes that this is a volume correction rather than a structural weakness in demand.
Segment-Wise Volume Analysis
The report highlights a gap between housing sales volumes and value growth over the past two years. Value CAGR decelerated from 76 percent in CY20-23 to 11 percent in CY23-25, prompting a segment-wise analysis.
Affordable and Lower Mid-Income Segment
The affordable and lower mid-income housing segment (prices below Rs 80 lakh) faced the first signs of pressure. Growth in this category slowed to about 3 percent year-on-year in CY23 before declining sharply in CY24 and CY25. The slowdown was driven by steep declines in NCR, Bengaluru, and Hyderabad, although MMR continued to show positive growth of 35 percent. Stress widened across markets in CY24 and deepened further in CY25, with all major micro-markets entering contraction territory. Pan-India volume consequently declined 28 percent year-on-year in CY25, with Hyderabad (57 percent) and NCR (34 percent) recording the steepest falls.
Mid-Income Segment
The mid-income segment (prices between Rs 80 lakh and Rs 1.5 crore) followed a similar trajectory. Growth slowed to about 1 percent in CY24 and contracted nearly 8 percent in CY25. This category had recorded strong growth in CY23, with pan-India sales volumes rising about 92 percent year-on-year. However, sales weakened sharply in CY24 as key markets such as NCR, Hyderabad, Bengaluru, and MMR moved into contraction. The decline intensified in CY25, with most markets reporting lower sales. Chennai was the only major market to post growth, rising 23 percent during the year.
Premium Housing Segment
The premium housing segment (prices above Rs 1.5 crore) remained relatively resilient, but growth moderated from CY24 to about 6 percent year-on-year in CY25. Pan-India premium housing volume growth eased from around 149 percent in CY22 to nearly 86 percent in CY23 and about 17 percent in CY24. Among major markets, MMR was the first to see a decline, with premium sales falling around 15 percent in both CY24 and CY25. Hyderabad also recorded a 7 percent contraction in CY25. NCR and Bengaluru continued to lead the premium housing market, but growth moderated significantly from the higher levels seen in previous years.
Outlook and Implications
The Anand Rathi report underscores that while the housing market is experiencing a volume correction, the underlying demand remains structurally sound. The moderation is largely cyclical, driven by affordability constraints and external shocks. The value growth in the face of declining volumes suggests a shift toward higher-priced properties, which may sustain revenue for developers. However, the rising unsold inventory could pressure pricing and lead to a more cautious approach from builders in launching new projects. The report's findings are crucial for investors and policymakers monitoring the health of India's real estate sector.
