Sun Belt Homebuilders Tackle Spec Home Surplus as Market Shifts to Build-to-Order Models

Sun Belt homebuilders are working through a surplus of spec homes as the market pivots toward build-to-order models. Speaking at the Bank of America Housing Symposium in June 2025, Toll Brothers’ former CEO Doug Yearley acknowledged that parts of Arizona, Florida, and Texas were dealing with spec inventory “overhangs.”

Yearley noted these surpluses would eventually “clean up over time” as builders reduced spec home starts in softer markets. He added, “I think that will naturally work its way out.”

During the pandemic housing boom, nearly all new-build homes were selling quickly. In March 2022, there were only 32,000 unsold completed new-build homes nationwide. However, as the boom faded, inventory rebounded—particularly in Sun Belt boomtowns—peaking at 134,000 unsold completed new-build homes in December 2025.

New data shows the number of unsold completed new-build homes has since declined to 119,000 as of March 2026. While this figure remains higher than the 113,000 unsold homes recorded in March 2025, the recent drop exceeds typical seasonal adjustments.

To contextualize the inventory shift, the ResiClub Finished Unsold New Homes Supply Index tracks unsold completed inventory relative to new home sales. A higher index indicates a softer market with excess supply, while a lower index reflects tighter conditions. Recent readings suggest the market is drifting back toward historically normal levels.

Builders Shift Focus to Build-to-Order Homes for Higher Margins

After a softer-than-expected 2025 and greater-than-expected margin compression, many large homebuilders announced plans in late 2025 to reduce spec builds in favor of build-to-order homes heading into 2026. The rationale was straightforward: build-to-order homes offer materially higher margins.

These homes are sold before construction begins, reducing carrying costs and the need for costly incentives to attract buyers. The strategy has already helped some builders lower their unsold completed home counts. For example, D.R. Horton, the nation’s largest homebuilder, reported significant progress.

D.R. Horton Reports 25% Drop in Unsold Homes

During the company’s April 21, 2026 earnings call, D.R. Horton CEO Paul Romanowski shared the following updates:

“Unsold homes [for us] are down 25% from December and 35% from a year ago, with both unsold homes as a percentage of total inventory and completed unsold inventory at their lowest levels since fiscal 2023 for homes closed in the second quarter.”

“We expect starts in the third quarter to be lower than the second quarter, and we will continue to manage our inventory levels and start space based on market conditions.”

The U.S. Census Bureau does not provide a detailed market-by-market breakdown of unsold completed new-builds. However, broader inventory trends suggest the surplus is concentrated in high-growth Sun Belt regions.