Lot Supply Tightened by 9.5% in Q2

Washington, DC, August 12, 2024-The New Home LSI, backed by data from Zonda, showed lot supply tightened year-over-year across the United States, as well as quarter-over-quarter. The index is a residential real estate indicator based on the number of single-family vacant developed lots and the rate at which those lots are absorbed via housing starts.

• The New Home LSI came in at 56.7 for 2Q24, representing a 9.5% decrease from 2Q23. The 2Q24 data shows a “significantly undersupplied” market nationally. Nationally, the market has been “significantly undersupplied” since 2017.
• On a quarter-over-quarter basis, supply decreased by 1.1% from 1Q24.
• It is important to remember how this index is calculated. We consider the total vacant developed lot supply and adjust it for overall starts activity. The LSI started to rollover in 4Q23 as builders felt more confident increasing starts again and that trend continued into the new year.

“The number one issue reported by homebuilders today is land and lot supply,” said Ali Wolf, chief economist at Zonda. “Delays in land development, including on the entitlement, zoning, and plan approval side, are driving up development costs and putting a lid on total market activity. The declining LSI for the second quarter underscores this issue, indicating that the pace of new construction continues to outstrip the pace at which vacant developed lots are coming online.”