Housing construction slows as unsold homes rise
Tuesday 22nd September 2026 on 14:31 in
Iceland
Construction of homes in Iceland has fallen sharply while the number of newly built homes awaiting buyers has increased, mbl.is reports. New figures from the Housing and Construction Authority, HMS, show that 6,216 homes were under construction nationwide in September, 11 per cent fewer than six months earlier.
The total has fallen by 348 homes, or 5 per cent, over the past year. At the same time, the number of newly built homes that have not been sold has risen rapidly and is now about 85 per cent higher than a year ago.
A total of 1,855 homes are complete but have not been put into use and remain unsold.
Progress has slowed on existing projects
Of the homes that were already under construction in March, 2,374 remained at the same construction stage in September. Nearly three out of four of these homes were at stages three or four of the six-stage progress scale.
HMS notes that an unchanged construction stage between two counts does not necessarily mean that work stopped during the period. However, the sharp increase in homes with unchanged progress indicates that some projects already under construction have slowed.
Fewest new projects on record
Construction began on 772 homes nationwide between the March and September 2026 counts. That was the lowest number recorded since HMS began counting homes under construction.
New construction starts fell by 56 per cent between the two counts and by 48 per cent compared with the September 2025 count. Over the past 12 months, construction began on 2,526 homes, down from 3,084 in the preceding 12-month period. That represents a year-on-year decline of 558 homes, or 18 per cent.
Even so, the number of new construction starts remains 11 per cent higher than in 2024 and 5 per cent higher than in 2023.
Lower completion forecast for 2027 and 2028
HMS now expects an average of about 2,500 completed homes per year between 2026 and 2028. Its forecast calls for about 2,600 completed homes in 2026, 2,300 in 2027 and 2,700 in 2028.
The forecast is subject to considerable uncertainty, particularly for 2028. The previous forecast had projected between 2,800 and 3,700 completed homes in 2027 and between 2,700 and 3,700 in 2028.
HMS said the lower forecast reflects a marked decline in new housing projects and expectations of slower progress, based on the growing number of homes showing no change between construction counts.