In a recent NAHB survey, 65% of builders reported that the overall supply of developed lots in their areas was low to very low. This is up only 1% from June 2017, but significantly higher than the 42% posted in September 2012.
The focus on lots was included in a special survey section in September’s NAHB/Wells Fargo Housing Market Index (HMI). The 65% of respondents citing a shortage of lots represents the largest low- supply percentage recorded since NAHB began periodically asking the question in the HMI survey in 1997.
The 65% includes 43% who characterized the supply of lots simply as low and 22% who said the supply of lots was very low.
The lot supply problem is particularly severe in relation to housing starts, which still have only partially recovered from the last downturn. After averaging 1.5 million new units from 1960-2007 and hitting a peak of two million in 2005, starts have recovered only to about 1.2 million a year. The continued low supply of developed lots is a hindrance to a fuller housing recovery, and helps explain some of the recent weakness in new home sales.
NAHB economist Ashok Chaluvadi provides more details in this Eye on Housing blog post.