NAHB: One in Four New Homes Built in 2020 Were Infills or Teardowns in Old Neighborhoods

One in four new single-family detached homes were built in an established neighborhood, either on infill lots or teardowns, according to the latest Annual Builder Practices Survey. According to the NAHB’s Eye on Housing blog, teardowns and infills accounted for almost half the new-home market in New England, but less than 20% of the market in the Midwest.

At 18.6% of the new single-family detached home market, homes built on infill lots in older neighborhoods are a substantial part of the market. The North East and Pacific stand out for registering significantly higher market shares for infill homes. In New England, more than a third (34.6%) of new single-family detached homes are built on infill lots. The market share of infills in the Middle Atlantic is almost 30%, followed by the Pacific (24.1%). At the other end of the spectrum is the Midwest, where the market share for infill homes is just above 12%. The lack of developable land is likely to boost infill development and helps explain its relatively high market share. Given the record high and growing lot shortages reported by the September 2021 survey for NAHB/Wells Fargo Home Market Index (HMI), new homes built on infill lots will likely command a growing share.

Teardowns play a smaller role in the new home market. The current market share of 6.4% is actually lower than the shares NAHB reported for teardowns in 2015 (7.7%), 2016 (10.2%) and 2017 (6.8%) based on the special questions appended to the HMI surveys at that time. The highest market share of teardowns is again in New England (14.4%), followed by the Pacific (13.4%) and Middle Atlantic (9.3%).The substantial regional differences in the market shares of teardowns reflect the diverse age of the housing stock, distinctive climate effects on housing durability, as well as varying severity of developable land and lot shortages in different regions.