NAHB: There's Not a Lot of Lots

The ongoing housing market problem regarding low inventory is being exacerbated by a record-low level of available lots for the construction of new residential property.

According to new data from the National Association of Home Builders (NAHB), 64 percent of builders that responded to this month’s NAHB/Wells Fargo Housing Market Index reported that their local supply of available lots was either “low” or “very low”—up from 62 percent last year. The current level of lot unavailability is the highest since NAHB began collecting this data in 1997.

“We have monitored lot availability for the last two decades, and it is clear that the scarcity of building lots is growing,” said NAHB Chief Economist Robert Dietz. “Whether due to land use policy, geographic constraints or other regulatory constraints, the lack of lots for residential construction will have negative impacts on housing affordability in many markets.”

The survey results varied somewhat, based on region of the country, size of builder, and type of lot. The dearth of developed lots is most apparent in the Western regions of the country, where 39 percent of builders said lot supply was “very low,” compared to 23 percent in the South and 18 percent in both the Midwest and Northeast. When referring to premium “Class A” category lots, builders in all regions reported similar opinions of widespread shortages.