Lot Supplies Hit Five-Year High but Still Off Historical Levels

New data shows the supply of building lots in the second quarter of the year was up 20.6 percent over a year ago.

Zonda’s New Home Lot Supply Index reported its fourth consecutive quarterly increase but the research firm said the market remains “significantly undersupplied,” a condition that has prevailed since 2017. The LSI tracks the number of single-family vacant developed lots and the pace at which builders start homes on them.

The situation is the direct result of reduced builder activity, Zona said. “The timing of land and lot deliveries is a growing challenge in today’s housing market,” said Ali Wolf, chief economist for Zonda. “While builders had planned to increase housing starts in 2025, they slowed production as the year progressed due to choppy consumer demand and rising resale supply. This slower pace of construction contributed to the five-year high in Zonda’s LSI, as fewer lots were converted into starts.” 

Twenty-two of the top 30 markets reported year-over-year gains in lot supply, topped by San Francisco, Los Angeles/Orange County and Tampa. On the other end of the spectrum, San Diego, Miami and Baltimore were the most “constrained” lot markets. Three metropolitan areas – Austin, Atlanta and Dallas – are now considered “appropriately supplied.”

Zonda said it sees more lot inventory coming down the road, with 400,000 currently “in the excavation stage and expected to be ready for building in the first half of 2026.”

Whether they will remain vacant or be developed will depend on builder confidence, Wolf said. “We don’t have a glut of supply but conditions are in place for the market to absorb additional homes.” 

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