The National Association of Home Builders was out Thursday with a report that builder perception of lot availability hit a record low in its most recent survey.
According to NAHB, 64% of builders responding to special questions in the May NAHB/Wells Fargo Housing Market Index reported that the supply of lots in their markets was “low” or “very low.” That was up two percentages points from this time last year and was the highest percentage on record since NAHB began tracking lot supply perceptions in 1997.
The lot shortage now comes amid a market where starts are at a rate of less than 1.2 million annually. In comparison, in 2005, when starts exceeded two million per year, only 53% of builders reported lot shortages.
“The lack of availability of buildable lots has quickly become one of the biggest issues facing our members,” said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Ill. “While labor shortages and regulatory burdens remain struggles as well, lot shortages are preventing our builders from responding to growing demand for housing.”
“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 NAHB said the survey results varied based on region of the country, size of builder, and type of lot. The dearth of developed lots is most apparent in the West, where 39% of builders said lot supply was “very low,” compared to 23% in the South and 18% in both the Midwest and Northeast. Builders everywhere reported widespread shortages in “Class A” category lots.
Read more in NAHB's Eye on Housing.