While obtaining lots remains a challenge for many builders, lot shortages have eased from their peak in 2021, according to the NAHB. According to responses to a supplementary survey as part of the May NAHB/Wells Fargo Housing Market Index, 42% of single-family builders said the supply of lots was “low” and 25% reported lot supply was “very low.”
A total of 67% of builders reported some type of shortage. Although this is down from 76% the last time NAHB asked the question (in September 2021), it is nevertheless the second highest incidence of lot shortages on record since NAHB began collecting the information in 1997.
The current 67% of builders reporting a shortage of lots is particularly high relative to the current level of production. Over the past six months, total housing starts have been hovering around an annual rate of 1.4 million. In comparison, in 2005 when total housing starts were over 2.0 million, “only” 53% of builders were reporting lot shortages.
In addition to the overall supply, since 2013 the HMI survey has also asked builders to rate the supply of A, B and C lots in the areas where they build. As usual, shortages tended to be most acute among lots in the most desirable, or “A,” locations in 2023. In the May 2023 survey, 67% of builders said that the supply of “A” lots was low or very low, compared to 58% for “B” lots and 52% for “C” lots. All three percentages are down from all-time highs posted in 2021. For A lots, however, the current shortage percentage is about the same as it was in the immediate pre-Covid period of 2016-2019, while for B lots it is lower, and for C lots it is higher
