Shortage of Lots Hurting Housing Recovery
Washington, DC, Sept. 5, 2013 -- A shortage of buildable lots, especially in the most desirable locations, has emerged as one of the key factors holding back a more robust housing recovery, according to the latest survey by the National Association of Home Builders.
“In our August 2013 survey, 59 percent of builders reported that the supply of lots in their markets was low or very low—up from 43 percent in September of last year, and the largest low supply percentage we’ve seen since we began conducting these surveys in 1997,” said NAHB Chief Economist David Crowe.
“One reason is that many residential developers left the industry, abandoned certain markets or simply stopped buying land and developing lots during the downturn.”
The 59 percent includes 39 percent who characterized the supply of lots simply as “low” and 20 percent who said the supply of lots was “very low.” Another 22 percent said the supply of lots was “normal,” 10 percent said it was “high” and four percent said “very high.” Six percent said they didn’t know or weren’t sure.
The survey found that lot shortages tended to be especially acute in the most desirable, or “A,” locations. Thirty-four percent of builders said that the supply of A lots was very low, compared to 18 percent for lots in B and 12 percent for lots in C locations.
The shortages have also translated into higher prices for builders who are able to obtain developed lots to build on.
“There is still a substantial pent-up demand for housing waiting to be unleashed as the overall economy and labor situation improves,” said Crowe.