America's largest home builder just cleared its biggest glut since 2022

by Luís Rijo 8 min read
Housing Markets Prices

At the peak of the pandemic housing boom, D.R. Horton - America's biggest home builder - had exactly 600 unsold completed homes sitting across the entire country. Six hundred. The company was selling houses faster than it could finish them. Then interest rates rose, buyers pulled back, and by early 2025 that number had ballooned to 8,400 - finished houses, nobody buying them, quietly costing money every single day they sat empty.

By fiscal Q2 2026, D.R. Horton had shrunk that figure to 5,500 - a reduction of roughly a third in a single year. That sounds like an accounting footnote. It is not. It is one of the clearest signals yet that the worst of the new construction correction may be behind us, and that the buyers who spent two years sitting on their hands are starting to move.

The background

To understand why this matters, you need to know how home builders actually make money - and how quickly they can lose it.

When a builder constructs a home without a buyer already attached, it is called a spec home (short for speculative build). The builder bets that demand will be strong enough that someone will buy the house once it is done. During the pandemic, that bet paid off immediately. Homes were sold before the paint dried. So builders built more. And more. And when rates went from near zero to over 7% between 2022 and 2023, the buyers evaporated. The spec homes did not.

An unsold finished home is not a neutral asset. It is a liability that grows a little more expensive with each passing month. The builder has paid for labor, materials, and land. It is carrying a loan on the property - the cost of the money it borrowed to build it. It is also paying insurance and maintaining the property while it waits. Every week the house sits empty, the builder bleeds margin - the gap between what something costs to make and what it sells for.

The natural response, and the one D.R. Horton and its competitors all deployed, was incentives. Rate buydowns - where the builder pays to temporarily lower the mortgage rate for the buyer. Price cuts. Upgraded warranties. Free kitchen upgrades. Whatever it took to move units.

That strategy worked, eventually. But it worked at the cost of the margins that make building financially sustainable in the first place. The result was a two-year period during which builders were selling homes, just not profitably enough. The glut is now clearing. The question is what comes next.

What is actually happening

Two things happened recently that, read together, tell you more about the next decade of American homebuilding than most headlines will.

D.R. Horton's CEO Paul Romanowski confirmed that unsold homes are down 25% from December and 35% from a year ago, with completed unsold inventory at its lowest level since fiscal 2023. Net sales orders rose 11% year-over-year. The company is not calling this a recovery. Romanowski also said the company expects housing starts in the third quarter to come in lower than the second. In plain terms: they are clearing the backlog, but they are not yet confident enough in demand to build aggressively again.

What is driving buyers back into the market is not dramatically lower mortgage rates - those have barely moved, edging from the high sixes toward the low sixes. It is something harder to quantify. Buyer fatigue. People who have been waiting for the perfect conditions, watching those conditions fail to arrive, and eventually deciding to buy anyway, perhaps in a smaller house or a different neighborhood.

KB Home, a builder with a $3 billion market capitalization, announced on April 9 that it will relocate its corporate headquarters from Los Angeles to Tempe, Arizona, beginning in spring 2027. The stated reason is cost. The company says the Phoenix area offers significantly lower costs compared to Los Angeles, where high home prices and operating expenses have long posed challenges for businesses.

The geography is deliberate. Arizona, particularly the Phoenix metro, has been one of the most heavily built Sun Belt markets in the country. It also accumulated some of the worst post-boom inventory overhangs. KB Home is not moving there despite the correction. It is moving there because the correction created opportunity - cheaper land, lower operating costs, and a market that still has structural demand under the surface.

According to Fast Company, inventory across Sun Belt markets is no longer surging at the rate it was. Florida, which saw active inventory climb 34% between 2024 and 2025, has seen that figure reverse to negative 8% year-over-year by early 2026 - meaning inventory is actually declining. Texas, which saw a 26% inventory increase between 2024 and 2025, has slowed that growth to roughly 9%.

The money trail

Follow the numbers and the logic snaps into place.

When D.R. Horton had 8,400 unsold completed homes, it was paying to carry every one of them. The carrying cost - the combined weight of financing, insurance, maintenance, and opportunity cost on a finished home - does not appear as a single line item on a press release, but it shapes every pricing decision the company makes. The deeper the discount required to sell a unit, the more it eats into the margin that was supposed to justify building it.

D.R. Horton's executive chairman noted that affordability constraints and cautious consumer sentiment continue to weigh on demand, even as net sales orders rose 11% year over year. That tension - rising orders alongside ongoing affordability pressure - is the defining contradiction of this market. People are buying. They just cannot buy at the prices builders need to make building worthwhile.

That is exactly why KB Home's relocation reads as more than a cost-cutting exercise. Company leaders cited lower costs, operational efficiency, and Arizona's business climate as major reasons for the move, noting that the Phoenix area offers significantly lower housing and operating expenses, which can be especially impactful for a homebuilder navigating land costs, permitting timelines, and development regulations. A builder that spends less running its operations can theoretically price its homes more competitively without sacrificing its own survival. Whether that actually flows through to buyers is a separate question, but the direction of travel is clear.

Meanwhile, a parallel economy has grown around homeowners who cannot or do not want to navigate the traditional selling process. Cash buyer companies - sometimes called iBuyers - promise to eliminate the hassle: no showings, no agents, no negotiations. Fill out a form and get an offer. An analysis of over 530 transactions by the two largest iBuyers, Opendoor and Offerpad, found that both companies paid a median of 8 to 10% less than a property's eventual resale price - a rough gauge of market value. That gap does not include service fees or repair deductions, which can add another 5 to 12% on top.

In concrete terms: on a $350,000 home, a seller going the iBuyer route might leave $25,000 to $35,000 on the table before fees are even counted. Despite their visibility, iBuyers represented only about 2% of sellers in October 2025. They are a niche product for a specific need - not a mainstream alternative that competes on price.

What people are doing about it

Builders are responding to the inventory drawdown cautiously, not confidently. D.R. Horton has explicitly said it will reduce housing starts in Q3 relative to Q2. The company is not ramping up construction just because the backlog is shrinking. It is managing supply to match what the market can absorb, while keeping its margin from deteriorating further.

Homebuilders relocating operations is also a form of adaptation. KB Home's move to Tempe is part of a broader pattern of corporate cost reduction that several large builders have pursued over the past two years. The calculation is straightforward: if building margins are compressed, every dollar saved on the corporate overhead side is a dollar that does not have to come from further price cuts.

For individual homeowners considering whether to sell, the proliferation of cash-buyer platforms has created a genuine tension. These companies are genuinely useful in specific situations - inherited properties, homes in poor condition, sellers who need to close in days rather than weeks. Together, Offerpad and Opendoor purchased fewer than 9,500 homes in all of 2025, which suggests that whatever buzz surrounds them, most sellers who investigate end up going another route.

The sellers who have struggled most are those in Phoenix and other Sun Belt markets with long-running inventory overhangs. In early 2026, the median sale price in Phoenix was around $461,000, down about 2.3% year over year, with homes averaging 62 days on market and nearly 65% selling below list price. In a market where the majority of listings are closing below asking, the strategy of pricing aggressively and waiting rarely works. The agents and sellers doing best are the ones adjusting price to reflect actual conditions, not hoped-for ones.

In Florida, the clearing of inventory has been quicker than many expected. Markets like Miami have outperformed the broader state, in part because of sustained international buyer demand. That does not mean Florida is back to a seller's market. It means the floor is firmer than the headline inventory numbers suggested a year ago.

The bottom line

The U.S. housing market is not recovering. It is stabilizing - which is a meaningfully different thing. The worst of the new construction inventory glut appears to be clearing, driven less by favorable mortgage rates than by buyers who simply got tired of waiting. Where the money is moving next is legible in the corporate decisions: KB Home is not relocating to Arizona by accident. It is following the land, the lower costs, and the structural demand that has not gone away even as prices made homeownership inaccessible for millions. The cash-buyer industry, meanwhile, continues to market itself as a shortcut. For most sellers, it is - just not the kind that saves money.

Timeline

Summary

Who: D.R. Horton, America's largest homebuilder; KB Home, a $3 billion builder; and the broader market of homeowners navigating cash-buyer platforms

What: D.R. Horton's unsold completed home inventory has fallen 35% year-over-year to 5,500 units - its lowest level since 2023. Simultaneously, KB Home announced it is moving its headquarters from Los Angeles to Tempe, Arizona. Both events signal a quiet but consequential shift in the U.S. housing market.

When: D.R. Horton's Q2 2026 earnings were released in April 2026. KB Home's headquarters announcement came on April 8, 2026, with the move planned for spring 2027.

Where: The trend is most visible in Sun Belt states - Arizona, Texas, Florida, and the Carolinas - where new construction activity has been highest and the post-boom correction most pronounced.

Why: A combination of buyer fatigue, modest inventory drawdowns, and ongoing margin pressure on builders is reshaping where homes get built and how builders organize their operations. Cash-buyer companies are growing in visibility but continue to serve a narrow slice of the market, typically paying 8 to 10% below market value before fees.

Luís Rijo

Luís Rijo

Luis Rijo has spent over a decade watching money move through digital markets - where it goes, who follows it, and who gets left behind when the flow changes direction. [email protected]