The report also defends builders against accusations of profiteering through landbanking, however.
People moving in to their home are to be given extra help, after an investigation from the Office of Fair Trading (OFT).
The organisation said that customers should be better protected from housebuilders - and that a new code of conduct for the construction industry should be drawn up. In addition, a new plan to give buyers better access to compensation if anything goes wrong with their home was also recommended.
However, the OFT's investigation found in favour of the builders in some regards, especially against accusations that many of them were deliberately retaining land without building on it in order to maximise profits. This process can mean that home-builds are restricted, building demand and keeping property, and mortgage, costs high.
Known as landbanking - in other words, having planning permission yet deciding against developing a site - the process even received praise from the new report. "Landbanking reflects the need for firms to have a pipeline of land at different stages in the development process," the OFT said.
The report also said that the homebuilding industry remains "competitive" - in other words, it generally gives buyers choice in properties. This keeps prices, and mortgage costs, proportionally low.
Commenting on the OFT's report, the Royal Institution of Chartered Surveyors remained adamant that landbanking remained a problem. Speaking to the BBC, director of external affairs Gillian Charlesworth said: "Unless there is a serious attempt to reform the planning system and allow smaller firms greater opportunities, house building levels will continue to disappoint and demand which can not be satisfied will continue to escalate."
