Zonda’s New Home Lot Supply Index (LSI) showed lot supply tightened year over year, but loosened quarter over quarter for the third quarter.
The LSI came in at 57.7 for Q3, representing a 9.7% decrease from Q3 2023. On a quarter-over-quarter basis, supply increased by 1.8% from Q2.
“While the LSI is still significantly undersupplied nationally, there are green shoots in our third quarter data,” says Ali Wolf, chief economist at Zonda. “The national LSI rose 1.8% quarter over quarter and loosened in 18 of our select 30 markets compared to Q2. In addition, total upcoming lots rose 8.2% from last quarter. Lot supply is the prerequisite for home building.”
Lot supply tightened year over year in most major metropolitan areas in the third quarter, with 21 of 30 decreasing, the same as last quarter.
The LSI tightened quarter over quarter in 12 of Zonda’s select 30 markets, a decrease from 14 in Q2.
Miami tightened the most compared to the same time last year, falling 58% to 11.8. Miami is now the tightest lot market in the country, followed closely by San Diego. Both Miami and San Diego have the lowest LSI value on record dating back to 2015. Los Angeles rounds out the top three. These markets have severe geographic and topographical limitations on land and lot development, states Wolf.
The markets where land supply loosened the most on a year-over-year basis were led by Charlotte, North Carolina; Orlando, Florida; and Jacksonville, Florida. In these markets, Q3 starts were mixed compared to this time last year, up 5% in Charlotte, and down 2% in both Orlando and Jacksonville.
Four markets are considered slightly undersupplied—Atlanta; Austin, Texas; San Antonio; and Dallas. Third quarter housing starts increased year over year in three of these markets, with Austin as the outlier, and vacant developed lots (VDLs) increased in just two, Austin and Dallas.
Total upcoming lots for Q3 increased 17.4% year over year and were up 8.2% from last quarter. Notably, total upcoming lots were up 21.4% from the recent trough at the end of 2023, and 23% higher than the same quarter in 2019.
Among total upcoming lots, roadwork increased the most, up 29.3% from the same period last year. Lots in the excavation stage were up 15.9% year over year, while those with equipment on site were up 9.7%.
The largest share of total upcoming lots were in the excavation stage in Q3, making up 59% nationally. These lots have an expected delivery between Q2 2025 and Q3 2025.
“Total community count across the country has declined 21.3% compared to 2019, and builders and developers are working to improve active project supply in many markets,” continues Wolf. “Larger builders feel good they can increase community count next year given their land positions, and our total upcoming lot data supports additional home building activity. Zonda anticipates modest growth in single-family housing starts for 2025.”
