Builders Faced With Worst Lot Shortages Ever

Home builders have hit a major roadblock. New data from the National Association of Home Builders (NAHB) showed that the biggest issue among builders is the lack of available lots to build.

According to the NAHB, lot availability has hit a record low with 64 percent of builders  reported that the supply of lots in their markets was “low” or “very low," up from 62 percent last year, and the highest that number has been since NAHB began collecting this data in 1997.

“The lack of availability of buildable lots has quickly become one of the biggest issues facing our members,” said Ed Brady, NAHB Chairman and a home builder and developer from Bloomington, Illinois. “While labor shortages and regulatory burdens remain struggles as well, lot shortages are preventing our builders from responding to growing demand for housing.”

In addition, the NAHB noted that this news comes at a time when new homes are being started at a rate of under 1.2 million a year. Housing starts were over 2 million in 2005, and the share of builders reporting a shortage of lots was 53 percent.

The report found that survey results varied somewhat among builders, based on region of the country, size of builder, and type of lot. The shortage of lots is most apparent in the Western regions of the country, where 39 percent of builders said lot supply was “very low." In the South, 23 percent said lot supply was "very low," and  18 percent said the same in both the Midwest and Northeast.

Robert Dietz, Chief Economist at NAHB said, “We have monitored lot availability for the last two decades, and it is clear that the scarcity of building lots is growing. Whether due to land use policy, geographic constraints or other regulatory constraints, the lack of lots for residential construction will have negative impacts on housing affordability in many markets.”