Real Estate Stocks Plunge in 2026: Sales Slump and Affordability Issues Weigh Heavily
Around 20 days into 2026, the real estate sector has emerged as the biggest loser, with stocks tumbling over 11 percent. All the Nifty Realty constituents have seen a significant decline, ranging from 7 to 20 percent, as moderating pre-sales, fewer launches, rising inventory levels, and affordability issues hit the realty segment.
Housing sales have been on a consistent downward trajectory over the past four quarters, with the number of units being sold falling 14 percent year-over-year (YoY) in 2025. This marks the second consecutive year of decline, following a 5 percent YoY drop in 2024. The quarter ending December saw the lowest sales in about 16 quarters, with roughly 98,000 units sold, a 28 percent decrease from the peak of 135,000 units in the March quarter of 2024. Furthermore, some companies are struggling to meet their pre-sales guidance, leading to a sharp correction in real estate stocks.
Launches have also slowed down significantly. In 2025, launches aggregated to 400,000 units, down 19 percent YoY, following a 2 percent YoY supply in 2024. Except for Hyderabad and Chennai, launches decreased YoY in all other cities in 2025. Mumbai continues to account for more than a third of unsold inventory in the country.
Pankaj Kumar, VP-Fundamental Research at Kotak Securities, noted, “We expect pre-sales across our residential real estate coverage to remain modest, largely reflecting subdued launches. Additionally, broader market weakness amid geopolitical uncertainties has further weighed on stock performance.”
Segment-wise, the premium and luxury segments drove the bulk of sales in 2025, while the affordable and mid-income segments continued to face challenges. Nuvama Institutional Equities observed, “In that sense, the width of the housing rally was relatively narrow unlike the previous upcycle when demand was robust across segments.” The trend towards premiumization has meant that over the past 18 months, the trend of improving volumes has been upended. This has led to a decrease in real estate stocks post-June 2024 when the divergence started.
Region-wise trends also show a sharp divergence across the top seven cities. The Mumbai Metropolitan Region's (MMR) luxury housing market continues to perform well, despite rising supply, as noted by Karan Khanna of Ambit Capital. Bengaluru, on the other hand, is facing delays in launches due to late RERA approvals. By the number of units sold, the MMR (34 percent), Pune (18 percent), and Bengaluru (16 percent) were major contributors to sales in 2025. Year-over-year, Bengaluru gained some share, while MMR and Pune lost share. Demand rose 4 percent YoY in Bengaluru and 5 percent YoY in Chennai, but slipped 19-22 percent compared to 2024 in Mumbai, Pune, and Hyderabad.
Analysts at Nuvama pointed to the lower levels of inventory in the National Capital Region (NCR). “In our view, very low unsold inventory levels such as those in the NCR across segments (despite surging prices and volume growth) point towards a ‘bubble’ in the system. One needs to have a cautious view about such markets.”
Looking ahead, Nuvama argued that housing volumes would remain soft until developers shift focus from the luxury segment to the mid-income and premium segments. They recommend that developers improve affordability by keeping prices and the ticket size contained, which will spur demand. Following the recent correction, valuations across most residential real estate stocks appear reasonable. “While industry volumes have shown some moderation, we continue to be constructive on listed developers, underpinned by ongoing geographical expansion and continued market share gains. We prefer DLF, Prestige, and Lodha for the long term,” said Kotak Securities.
