The number of homebuilders who reported a shortage of developed lots in their areas hit a record high of 62% in May, up 2% from a year ago and considerably higher than the 43% who complained about the problem in September 2012, according to the National Association of Home Builders.
Nearly 40% of builders in a survey characterized the supply of buildable lots as “low,” while 23% called it “very low.” The builders reported acute shortages in desirable “A” locations.
In addition, nearly a third said the price of “A” lots was “substantially higher” than it was a year ago.
The chronic lack of developed lots is hurting the housing recovery, NAHB economist Ashok Chaluvadi wrote in a blog. As evidence, Chaluvadi compared the average 1.5 million housing starts a year from 1960 to 2000 with the 1 million homes that broke ground in 2014.
High prices for the few lots available in desirable locations puts upward pressure on home values, Chaluvadi wrote.
The shortage took root during the recession, when cash-strapped developers did not apply for approvals for new developments. Those approvals — many of which are in the works now—can take two to four years.