New-home lot supply has tightened considerably across the U.S., according to Zonda. Its latest New Home Lot Supply Index came in at 49 for the first quarter of 2021, down 10.1% from the fourth quarter of 2020 and 24.2% from the first quarter of 2020.
At the market level, lot supply trended below Q1 2020 levels in nearly every top market. All top markets remain “significantly undersupplied,” with New Home LSI readings of 75 or below.
“The race to acquire lots is on as builders continue working to quickly get more homes on the ground,” says Ali Wolf, chief economist at Zonda. “Competition for lots is fierce, but demand is showing no signs of letting up, which is encouraging more building.”
Los Angeles, San Francisco, and Baltimore are the markets where lot supply tightened the most on a year-over-year basis. All three remain the tightest overall for lot supply of the major markets. Zonda attributes this tight lot supply to rising demand for for-sale product combined with topography issues and NIMBY influences.
“The silver lining in today’s extreme lot shortage is that it should be short-lived,” says Wolf. “Builders have been aggressively buying land in different stages of development, and many of these lots will turn into homes for sale in the coming year or two.”
