Residential sales to stay soft as housing cycle likely to enter mid-stage; what 2026 holds

Nuvama Institutional Research has released its latest assessment of India’s real estate sector, noting a subdued outlook for residential sales volumes amid affordability pressures and a changing demand landscape. While the long-term growth story remains, near-term constraints are likely to keep overall sector performance muted.

According to Nuvama, housing sales by value fell 2% year-on-year in November 2025, remaining flat month-on-month, despite robust demand in October due to the festive season. Sales volumes increased 3% month-on-month, suggesting a gradual recovery in the affordable segment. Year-to-date sales value for 2025 is up 6% year-on-year, led by gains in Kolkata, NCR, Chennai, and Bengaluru, though Hyderabad and major Maharashtra cities registered a decline.

Nuvama’s analysis finds that launches by value dropped sharply by 31% year-on-year in November and were down 22% from the previous month. Year-to-date, launches are down 4% compared to last year, mainly due to a pullback in the MMR and Pune regions. Conversely, new supply surged in southern cities such as Chennai, Hyderabad, and Bengaluru, reflecting differing regional dynamics.

Pan-India unsold inventory stands at a comfortable 18 months, with the NCR, Pune, and Bengaluru particularly tight at just 13–15 months. This allows developers to implement price hikes. Price appreciation has been strong in most major cities, with Mumbai Metropolitan Region (MMR) seeing a 17% year-on-year increase, and Bengaluru and Kolkata up by 12%. Only the NCR recorded a 17% annual price decline.

Nuvama emphasises, “As highlighted in our recent report Making sense of housing cycle, in the near term, we believe there is unlikely to be a long-lasting solution to concerns around: i) weak volume growth amid falling home affordability and inadequate availability of mid-income houses; and ii) job generation (Link) amid tariff wars/K-shaped growth in the economy. We believe volatility shall persist and reckon stocks shall continue to be range-bound with downside protected by falling mortgage rates even as the upside is capped by valuation/volume growth concerns. We continue to prefer Prestige Estates (‘BUY’) and Brigade (‘BUY’).”

The brokerage points out that the sector has moved into the middle stage of its cycle. As per Nuvama, “As we argued in our reports Making sense of housing cycle and Midcycle dynamics showing up, the housing cycle has entered its middle stage—implying that the breadth of the housing cycle, product mix and interest rate cuts shall determine stocks’ trajectories hereon rather than pre-sales growth. Top picks: Prestige and Brigade.”

Nuvama’s report also highlights potential sector headwinds, stating, “We reckon working capital intensity shall increase driven by: i) a pickup in construction activity; ii) abatement of buying frenzy; and iii) low finished inventory levels in the industry. We believe increase in house prices shall moderate, thereby capping margin improvement. Given land capex is likely to remain high, this should keep cash flow in check.”

Nuvama argued that the Indian housing market shall have to be seen in the context of seven different geographies, each behaving differently and with its own set of dynamics.”

Industry participants, on the other hand, point towards a firm pricing and selective demand across high-quality micro-markets to strike a more constructive note. Developers believe that easing interest rates and infrastructure-led urbanisation could support housing demand into 2026, even as growth becomes more layered and location-specific.

Housing prices witnessed a steady rise in most active markets in 2025. Not just large cities, but emerging towns and peripheral urban pockets performed equally well, underscoring how urbanization is no longer metro-centric and is steadily moving into high-potential micro-markets, said Manoj Gaur, CMD, Gaurs Group.

"As we step into 2026, buyers should expect a growing landscape. With the country’s economy expected to chart steady growth, the RBI may continue taking a lenient view and see a further decrease in interest rates. Pricing will remain firm in strong micro-markets, with real estate continuing to stand out as a stable, long-term investment asset," he said.

Karan Malik, Regional Director at Realistic Realtors said that the RBI’s cumulative 125 basis points rate cut supported this confidence, but the real shift is behavioural. Heading into 2026, housing growth will be selective and layered, rewarding markets that offer genuine infrastructure depth and livable ecosystems, he said.