Unsold residential inventory rose 6.3% year-on-year in the first half of 2026, while new launches increased 9%. Sales, however, have not kept pace, with overall housing sales down around 3% from the same period a year ago.
The pressure is particularly visible in affordable housing, where sales of homes priced below ₹50 lakh fell 32% in the first half of 2026. At the other end of the market, sales of homes priced between ₹1.5 crore and ₹3 crore surged 58%.
With the festive season traditionally considered an important period for housing demand, developers are hoping for a revival in sales.
Why is unsold housing inventory rising?
The main issue is a mismatch between new supply and sales.
Developers launched 9% more homes in the first half of 2026, while sales fell around 3%. This has resulted in a rise in unsold inventory across major markets.
Bengaluru has seen particularly strong growth in new launches, with launches rising 41%. As a result, unsold inventory in the city increased 14.3%.
Delhi and Mumbai have also seen a strong pipeline of new projects, contributing to higher levels of unsold inventory.
The increase in supply comes at a time when buyers remain cautious about property prices, despite home loan rates being lower than they were a year ago.
Why is the festive season important?
The festive quarter is traditionally an important period for housing sales, and developers are hoping that demand will improve in the coming months.
However, demand has been relatively tepid in the run-up to the festive season. High property prices remain one of the concerns for buyers.
Developers may therefore have to rely on incentives, offers or more aggressive pricing to encourage buyers to make a purchase.
Vivek Rathi, National Director of Research at Knight Frank India, said, “Depending on the intervention by developers in terms of giving the right set of incentives or offers for the consumers to quickly make that decision and sign up, you will see the buoyancy in the market, which will translate into growth. However, it may not be as strong as maybe the festive period of 2024.”
Why is affordable housing under pressure?
The biggest concern is not the premium housing segment but affordable housing.
Sales of affordable homes priced below ₹50 lakh fell 32% in the first half of 2026 compared with the same period last year.
Experts see a two-sided problem in this segment: demand is weak, while supply has also been shrinking.
At the same time, premium housing continues to attract buyers. Sales of homes priced between ₹1.5 crore and ₹3 crore rose 58% in the first half of 2026.
This has created a sharp divide in the housing market, with higher-value homes continuing to see strong demand while affordable housing struggles.
Does the affordable segment need government support?
Experts believe some form of government intervention could be needed to revive affordable housing.
Rathi said the intervention could focus on encouraging supply rather than necessarily providing direct financial support.
“Affordable will need some intervention from the government, particularly on the supply side. It may be a non-financial incentive or intervention, but there will be a need. The premium segment continues to perform better, and at the same time, the lower segment has been shrinking over the last few years,” Rathi said.
The argument is that measures supporting both developers and buyers could help revive activity in the lower-priced segment.
Could rising inventory eventually push prices lower?
A prolonged increase in unsold inventory could put pressure on developers to offer better deals to buyers.
As more projects come to the market, buyers could also have more choices, potentially giving them greater bargaining power.
Ritesh Mehta, Senior Director at JLL, said, “Now, from this couple of quarters onwards, you will see a lot of supply coming in, which will further give a lot of support for the end users to have more choices to buy, and we would be encountering the launch season in a couple of months from now.”
This does not necessarily mean that housing prices will fall immediately. However, if inventory continues to rise while sales remain weak, developers could increasingly use discounts and promotional offers to attract buyers.
What happens if festive demand remains weak?
The 2026 festive season will be an important test for the housing market.
If sales pick up, developers could see some relief from rising inventory. But if demand remains weak, unsold stock could continue to build, particularly in markets where new supply is increasing rapidly.
The impact could be more significant for affordable housing, where sales have already fallen sharply.
Premium and luxury housing, meanwhile, appear better placed, with strong sales growth in the ₹1.5 crore to ₹3 crore segment.
For the broader housing market, the key question is whether the festive season can bridge the gap between rising supply and slower sales.
If it cannot, developers may have to rely more heavily on incentives and pricing strategies, while the affordable housing segment could increasingly look towards government intervention for support.