Shortage of Buildable Lots Holding Back Housing Market -NAHB

Builders are encountering a shortage ofrnbuildable lots the National Association of Home Builders (NAHB) said today; a lackrnof lots that is particularly acute in the most desirable areas.  The situation, reported by builders in arnsurvey conducted by NAHB may be one of the key factors holding back a morernrobust housing recovery the organization said.</p

In the August survey August, 59 percentrnof builders reported that lots in their market were in low or very lowrnsupply.  When the last such survey wasrnconducted in September 2012 43 percent reported a low availability.  NAHB Chief Economist David Crowe said the 59rnpercent response was the largest the Association had seen since it startedrnasking the question in 1997. </p

Thirty-nine percent of respondentsrncharacterized the supply of lots as “low” and 20 percent called it “very low.”  Twenty-two percent called the number of lots “normal”rnand 14 percent said it was “high” or “very high.”</p

The greatest shortages were reported inrnareas considered the most desirable or “A” locations.  Thirty-four percent of respondents reportedrnlow supplies in A areas compared to 18 percent in “B” and 12 percent in “C”rnlocations.  </p

The shortages mean higher prices forrnbuilders who are able to obtain developed lots and 34 percent of home builders saidrnprices for A lots was somewhat higher than a year earlier while 26 percentrncalled prices substantially higher.  Brnlots were called substantially pricier by 15 percent of builders and C lots byrn11 percent.  <br /<br /Crowe said one reason for the shortage is that many residential developers leftrnthe industry, abandoned certain markets or simply stopped buying land and developingrnlots during the downturn.<br /<br /The shortage of buildable lots has led to higher prices for the consumer againstrnthe backdrop of a housing recovery that is still modest by historicalrnstandards. To this point, housing starts have recovered from a low of 550,000rnin 2009 to an annual rate of just fewer than 900,000 in the Census Bureau’srnlatest release. Historically, starts averaged more than 1.5 million a year fromrn1960-2000, without ever plunging below 1 million until 2008.<br /<br /Crowe said, "There is still a substantial pent-up demand for housing</bwaiting to be unleashed as the overall economy and labor situation improves.  Lot shortages are one of several barriersrnthat have arisen, restraining builders from responding completely to increasedrndemand. Other barriers include a shortage of labor in carpentry and other keyrnbuilding trades, limited availability of loans even for credit worthy homernbuilders and home buyers; and, more recently, an uptick in interest rates."