As materials and labor shortages continue apace, homebuilders are confronting a new challenge: finding lots on which to build.
A recent survey from the National Association of Home Builders shows that 76% of builders rated the overall supply of developed lots in their regions as low to very low—an all-time record since NAHB began collecting the data in the 1990s. The prior record was 65% in 2018.
Around 46% of single-family builders said the lot supply in their areas was simply low, and 30% said it was very low. Since 2013, the survey has also asked builders to rate the supply of A, B and C lots in the areas where they build, and keeping with prior trends, shortages were most significant for “A” lots.
But “all three percentages are at record highs, however, indicating that lot supply problems are historically widespread irrespective of the desirability of the locations,” NAHB’s Paul Emrath writes in a recent analysis of the survey data. “Along with the other aforementioned supply chain challenges, these lot supply problems are one of the reasons NAHB’s standard measure of housing affordability has fallen to its lowest level in nearly a decade.”
The NAHB/Wells Fargo Housing Market Index builder confidence index inched up one point in September to 76 thanks to marginally lowered lumber prices and strong housing demand, bringing an end to a three-month decline. The index hit a peak of 90 last November.
Last month, NAHB Chief Economist Robert Dietz said, “The single-family building market reached a still hot but more stable level of activity, as reflected in the September HMI. While building material challenges persist, the rate of cost growth has eased for some products, but the job openings rate in construction is trending higher.”
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