New Home Lot Inventory Dropped to Cycle Lows, Zonda Reports

By Carl Norcott.
Updated Aug 11, 2021

NEWPORT BEACH, Calif. (PRWEB) August 11, 2021 - Today, the experts at Zonda, the housing industrys foremost advisors, released the New Home Lot Supply Index (LSI) for 2Q2021. The New Home LSI, backed by data from Zonda, shows lot supply tightened year-over-year across the United States. The index is a residential real estate indicator based on the number of single-family vacant developed lots and the rate those lots are absorbed.

The drop in vacant developed lots is a direct result of builders buying up finished dirt as quickly as they can so they can build more homes, said Ali Wolf, chief economist at Zonda. The limited supply of vacant developed lots is encouraging more land development. Total upcoming lots in the 2nd quarter grew 14% year-over-year.

Lot supply trended below 2Q20 levels in every top market across the country.

The universal strength in housing has led to a universal lot shortage across the country, said Wolf. The steep drop in the LSI tells us that builders have been buying finished lots quicker than replacements are being brought to the market resulting in an extremely competitive land market.

Methodology

The Zonda New Home Lot Supply Index (LSI) is built on proprietary, industry-leading data that covers the production new home market across the United States. The index values represent single-family vacant developed lot supply, lots that are ready to be built on, relative to equilibrium. Released quarterly, the New Home LSI provides an unrivaled look into the lot markets across the country, offering a current quarter snapshot as well as insight into the directional trend.

The New Home LSI is calculated based on each markets specific equilibrium as determined by our team of local experts and historical activity. The comparative current value is adjusted to capture the true months of supply figure by applying a greater weight to vacant developed lots in subdivisions with more starts activity. Each index value is associated with a phrase highlighting the current lot supply dynamics. A value of 100, represents perfect equilibrium, while a value of 125 and above equals Significantly Oversupplied, 115-125 - Slightly Oversupplied, 85-115 - Appropriately Supply, 75-85 Slightly Undersupplied, and 75 and below Significantly Undersupplied.

The foundation of the index is a quarterly release conducted by Zonda. It is necessary to monitor residential lot supply to understand how new home markets may be impacted by the incoming pipeline.

About Zonda Zonda represents the housing industrys leading provider of rich data and the industrys top advisors for residential real estate development and new home construction. With products and services geared for homebuilders, multifamily developers, lenders, and financial institutions, we provide innovative solutions to maximize opportunities in today's real estate development landscape. To learn more, visit zondahome.com.