Zonda Reports New Home Lots Significantly Undersupplied
(Illustration courtesy of Zonda)
The supply of single-family vacant developed lots has tightened, according to Zonda, Newport Beach, Calif.
Zonda’s New Home Lot Supply Index found that lot supply tightened year-over-year and quarter-over-quarter across the United States. The index examines single-family vacant developed lots and how quickly they are absorbed via housing starts.
The index came in at 56.7 for the second quarter, a 9.5% decrease from second-quarter 2023. “The 2Q24 data shows a significantly undersupplied market nationally,” the report said. “Nationally, the market has been significantly undersupplied since 2017.”
On a quarter-over-quarter basis, supply decreased by 1.1% from the first quarter, Zonda reported. It said builders began to feel more confident in late 2023 and that trend continued into the new year.
“The number one issue reported by homebuilders today is land and lot supply,” Zonda Chief Economist Ali Wolf noted. “Delays in land development, including on the entitlement, zoning and plan approval side, are driving up development costs and putting a lid on total market activity.”
Wolf said the declining index for the second quarter underscores this issue, “indicating that the pace of new construction continues to outstrip the pace at which vacant developed lots are coming online.”
Lot supply tightened in most major metropolitan areas in 2Q24, with 21 of 30 decreasing year-over-year, up from 19 last quarter, the report said.
The largest share of total upcoming lots were in the excavation stage in the second quarter, making up 57% nationally. These lots have an expected delivery between the first and the second quarter of next year.
“Tracking upcoming lots and listening to builder feedback can help guide us on future housing starts,” Wolf said. “Roughly 70% of homebuilders plan to increase housing production this year and 80% are planning for even more starts in 2025. This confidence is largely driven by two things – the hope of lower interest rates and the anticipation of more lot supply.”
