While builders continue to grapple with labor and material supply-side challenges, they are confronting what could be an even more urgent problem — an extreme lot shortage.
In a recent NAHB survey, 76% of builders reported that the overall supply of developed lots in their areas was low to very low. This is an all-time record — by a wide margin — since NAHB began collecting the information in the 1990s. The previous record was 65%, recorded in 2018.
Responding to questions in the September 2021 NAHB/Wells Fargo Housing Market Index (HMI) survey, 46% of single-family builders characterized the supply of lots simply as low, and 30% said the supply of lots was very low, for a total of 76% of builders indicating some type of problem with lot supply.
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 separately. As usual, shortages tended to be most acute among lots in the most desirable, or “A,” locations. Seventy-four percent of builders said that the supply of “A” lots was low or very low, compared to 67% for “B” lots and 57% for “C” lots.
All three percentages for the respective categories are at record highs, however, indicating that lot supply problems are historically widespread irrespective of the desirability of the locations.
