Home Building Lot Shortage Continues
Although shortages are not quite as widespread as they were in 2021, obtaining lots remains a challenge for many home builders, according to recent results from the Æðµã´«Ã½/Wells Fargo Housing Market Index (HMI) survey.
In special questions on the May 2025 HMI survey, 64% of single-family builders reported a shortage of lots, with 38% characterizing the supply as low and 26% saying it was very low. This is down slightly from the 67% reported in both 2023 and 2024, and down significantly from the peak of 76% in 2021 (a year after the COVID-19 pandemic). Nevertheless, the shortage percentage is higher than it had been at any time between 1997 (when Æðµã´«Ã½ first began tracking the number) and 2016.
The current lot shortage seems particularly severe relative to the level of new housing production. Before the historic 2009-2010 trough in housing starts, the share of builders reporting a low or very low supply of lots never exceeded 53% — even in 2005, when starts topped 2 million. However, by 2015, when starts had partially recovered, the share of builders reporting lot shortages unexpectedly climbed to more than 60%, and it has remained there stubbornly ever since.
Over the past three years, the annual starts rate has been consistently under 1.5 million (approximately the long-run average from 1970 through 2000), while the share of builders reporting a low availability of lots has never dipped below 64%.
An inadequate supply of lots adds to the challenges to build homes, especially at the lower end of the price scale, and adversely impacts housing affordability.
Paul Emrath, Æðµã´«Ã½ VP of Survey and Housing Policy Research, provides more details in .