Lot Shortage Problems Persist

Daily Real Estate News | Thursday, May 28, 2015

Finding suitable lots remains a top concern among homebuilders. Sixty-two percent of builders reported that the overall supply of developed lots in their areas was low to very low, according to a survey conducted this month by the National Association of Home Builders. That marks the largest percentage of builders who have called lot shortages a severe problem since NAHB began tracking it in 1997.

The problem has only grown in recent years. In September 2012, the percentage of builders who called lot shortages a problem was at 43 percent – compared to 62 percent today.

“The continued low supply of developed lots is a hindrance to the housing recovery that is still quite modest by most standards,” according to a post on NAHB’s Eye on Housing blog.

Lot shortages are the most problematic in what are considered “A” — or the most desirable — locations, according to NAHB. Thirty-four percent of builders said that the supply of “A” lots was very low compared to 19 percent of builders who called “B” lot shortages a severe problem or 14 percent in “C” locations.

“A shortage of buildable lots, especially in the most desirable locations translates into higher prices, as 38 percent of home builders said the price of developed ‘A’ lots was somewhat higher than it was a year ago, and 32 percent said the price was substantially higher,” according to the Eye on Housing blog. However, only 16 percent of builders said the price of “B” lots was significantly higher than a year ago, and 12 percent said the price of “C” lots was substantially higher.

Source: “Lot Shortage: A Lingering Problem for Builders,” National Association of Home Builders Eye on Housing blog (May 27, 2015)