Home Builders Report Low Supply of Lots

In addition to high material costs and difficulty finding skilled laborers, home builders are also struggling to obtain lots. According to the National Association of Home Builders/Wells Fargo Housing Market Index survey, many builders report a shortage of buildable lots. In the survey, 38% of single-family home builders characterized the supply of lots as low, and another 26% described the availability of lots as very low.

In total, 64% report some type of shortage, which is down slightly from the 76% reported in 2023 and 2024, and down from 2021’s peak of 76%. Still, the figure remains high.

The current lot shortage seems particularly severe relative to the level of new housing production. Before the historic 2009-2010 trough in housing starts, the share of builders reporting a low or very low supply of lots never exceeded 53%—even in 2005 when starts topped 2.0 million. However, by 2015, when starts had partially recovered (from the trough of under 600,000 to 1.1 million), the share of builders reporting lot shortages unexpectedly climbed to over 60%, and it has remained there stubbornly ever since. Over the past three years, the annual starts rate has been consistently under 1.5 million (approximately the long-run average from 1970 through 2000), while the share of builders reporting a low availability of lots has never dipped below 64%.