Lot Supply Loosens, But Market Still 'Undersupplied'
Originally Published by: Builder — May 8, 2025
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Lot supply loosened in the first quarter of 2025, according to Zonda’s New Home Lot Supply Index (LSI). The LSI increased on a year-over-year and quarter-over-quarter basis, marking the third consecutive period of quarterly growth.
The LSI 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.
“Today’s housing market is shaped by the intersection of politics, economics, affordability, and consumer sentiment,” says Ali Wolf, chief economist for Zonda and NewHomeSource. “The resulting impact is a choppy market, and mixed messages on the lot supply front.”
Wolf says the LSI registered its highest reading in five years—64.3—owing to slower housing starts and more cautious consumers. Despite the high reading relative to recent years, the land market remains “significantly undersupplied.”
Total upcoming lots—to be delivered over the next 12 to 18 months—increased 4.7% year over year in the first quarter and increased 6.5% from the fourth quarter of 2024. Compared to the same quarter in 2019, total upcoming lots were up 26.3%.
“There has been a lot of money invested in land and lot development in recent years, and we are seeing the fruit of that labor show up in total upcoming lots,” Wolf said. “The big question now is how aggressive builders will be in the shifting market with housing starts, new community openings, and their acquisition plans.”
The largest share of total upcoming lots were in the excavation stage, making up 59% nationally. These lots have an expected delivery between the fourth quarter of 2025 and the first quarter of 2026.