Four Months of Inventory Reduction
China's unsold housing inventory fell for the fourth consecutive month in June 2026 — a tentative but meaningful signal that demand-side stabilisation measures and supply-side destocking policies are beginning to bite. The National Bureau of Statistics confirmed the trend, noting that the stock of unsold new residential units had declined by a cumulative approximately 8% from its peak in early 2026.
Drivers of the Improvement
- Government destocking initiatives: The 'good housing' standards (改善型住房) and affordable housing buyback schemes in selected cities have removed lower-quality inventory from the market.
- Special purpose bonds: Local governments have been authorised to issue special bonds for housing inventory purchase, allowing them to buy unsold units directly for social housing use.
- Improved sales velocity: Average days-on-market for new projects in tier-1 cities fell to approximately 90 days in June, down from 120+ days in January 2026.
- Low mortgage rates: The 5-year LPR at 3.5% and first-home mortgage rates near 3.0–3.1% have improved affordability for buyers entering the market.
Second-Hand Market Outperformance
Second-hand housing transactions have consistently outpaced new builds in most cities, reflecting buyers' preference for completed, visible properties with known communities over pre-sale projects. Shanghai recorded 9,200+ second-hand home transactions in July 2026 alone — a monthly rate consistent with market normalisation.
Regional Variation
| City Tier | Inventory Trend | Price Trend |
|---|---|---|
| Tier-1 (Beijing, Shanghai, Guangzhou, Shenzhen) | Declining steadily | Stabilising; selective rises |
| Strong tier-2 (Hangzhou, Chengdu, Nanjing) | Modest decline | Flat to slight recovery |
| Tier-3 and below | Little change | Still under pressure |
Is a Turnaround Underway?
While the inventory drawdown is encouraging, analysts caution against over-interpreting four months of improvement. Property investment remained down approximately 18% year-on-year through H1, and new construction starts have yet to recover. The white list mechanism and special bond programs are providing support, but a full sector recovery — especially in smaller cities — will take more time and sustained policy commitment.