Lot supply loosened on both a year-over-year and quarter-over-quarter basis in the first quarter of 2026, a direct result of the softer demand builders are experiencing.
Zonda’s New Home Lot Supply Index (LSI), a reading based on the number of single-family vacant developed lots (VDL) and the rate at which those lots are absorbed via starts, rose for the seventh consecutive quarter to 84.6. On a year-over-year basis, the LSI is up 31.6%. After the national market crossed over into the “slightly undersupplied” category for the first time since 2017 last quarter, the national market remained “slightly undersupplied” in the first quarter.
“Lot supply is loosening as builders respond to a softer demand environment,” says Ali Wolf, chief economist for Zonda and NewHomeSource. “Affordability remains stretched, and consumers are cautious amid economic uncertainty and geopolitical risks. As a result, builders have pulled back on starts in many markets, allowing vacant developed lot supply to build.”
Wolf notes this does not signal a national oversaturation of the land market; instead, it reflects a rebalancing of supply and demand that is returning to “normal” levels after years of unusually tight lot conditions.
Of the 30 markets tracked by Zonda, lot supply loosened in all markets except New York and Minneapolis. Most markets were rated as “appropriately supplied” or “oversupplied” in the first quarter, but 14 of the 30 analyzed markets remained “significantly undersupplied.”
Lot supply loosened the most on an annual basis in San Diego, San Francisco, and Devner while lot supply tightened the most in New York. Miami and San Diego remain the tightest lot markets in the country, according to Zonda. Denver, Austin, and Atlanta were the top markets with the loosest supply in the first quarter.
Zonda tracks future lots through stages of development ranging from raw land to the streets in phase—the last phase before a lot becomes a VDL. Total upcoming lots, which indicates delivery over the next 12 to 18 months, decreased 2.2% on a year-over-year basis but increased sequentially from the fourth quarter.
The largest share of total upcoming lots were in the excavation stage, representing 398,000 lots. These lots have an expected delivery between the fourth quarter of 2026 and the first quarter of 2027.
“Upcoming lot activity suggests the industry is taking a more measured approach, showing relative stability over the last two years,” says Wolf. “The development pipeline is still active, but it has come down from the 2022 peak, which is appropriate given today’s slower sales environment. The key is balance, though, where builders need enough lots to be prepared for shifts in demand, but they also need to avoid pushing too much supply into markets where buyers remain cautious.”
