Unsold homes in India rise by 2.7% to 8,65,000: Report
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India's unsold residential inventory has climbed to 865,000 units, with the Mumbai Metropolitan Region accounting for 30% of the surplus. Despite a 25-bps repo rate hike, developers in the National Capital Region remain optimistic about steady festive demand.
The State of India’s Residential Real Estate Sector
The Indian residential real estate market is currently navigating a complex period of stagnation, characterized by a notable uptick in unsold inventory. According to data from Liases Foras, the national stock of unsold homes has risen by 2.7%, reaching a total of 865,000 units by the end of the first half of the current financial year. This accumulation of inventory suggests a disconnect between the aggressive supply-side expansion by developers and the absorption capacity of the current market.
The Mumbai Metropolitan Region (MMR) Conundrum
The Mumbai Metropolitan Region (MMR) remains the epicenter of this inventory surplus, housing approximately 30% of the nation's total unsold units. Recent data indicates that sales in this region have flattened, recording a minor decline of 0.1% to 34,552 units. Paradoxically, despite this sluggish demand, developers increased residential supply by 18.7% during Q2 of FY 2026-27, pushing new launches to 30,262 units. This surge in supply, coupled with stagnant sales, has caused the unsold stock in MMR to climb to 260,629 units.
Interest Rates and Market Resilience
Compounding these challenges is the broader macroeconomic environment, specifically the Reserve Bank of India’s decision to increase the repo rate by 25 basis points to 5.50%. While such monetary tightening typically acts as a cooling mechanism for real estate by increasing the cost of borrowing and monthly EMIs, the impact remains nuanced. In the National Capital Region (NCR), developers are projecting resilience, banking on strong end-user demand and improved infrastructure to sustain momentum through the festive season.
Segmented Impact: Luxury vs. Affordable Housing
The market’s response to interest rate hikes is not uniform. Evidence from the NCR suggests that the luxury and premium segments, particularly in hubs like Gurugram, exhibit a high degree of insulation from marginal EMI increases. Wealthier demographics, who drive these segments, are often less sensitive to incremental shifts in borrowing costs, allowing these specific niches to maintain stability even when the broader market faces headwinds.
Future Trends and Outlook
Looking ahead, the divergence between inventory growth and sales velocity presents a critical challenge for developers. If supply continues to outpace demand, developers may be forced to recalibrate their launch strategies or offer more aggressive incentives to clear existing stock. The long-term trajectory will likely hinge on the interplay between resilient economic fundamentals and the ability of developers to align their supply with the actual purchasing power of the middle-class segment, which remains more sensitive to interest rate fluctuations than the luxury sector.
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