Thanks to lower housing starts, more land became available in the fourth quarter of 2023 compared to the same period last year, it said. Zondanew housing land supply index.
However, lot inventory declined on a quarterly basis, indicating increased activity among construction companies. On a year-on-year basis, the index rose 25.1% to 61.9, but Zonda noted that the domestic market remains “significantly undersupplied.” On a quarterly basis, supply decreased by 3.2%.
“While a slowdown in construction starts caused a temporary reprieve in land supply in the market, fourth-quarter data suggests a tightening as builders ramp up construction activity,” Ari Wolf, Zonda’s chief economist, said in a statement. “It captures the fact that it’s coming back.”
“75% of builders plan to break ground on more homes in 2024 compared to 2023, and those starts will require more homes.The persistent problem is that today’s land prices are lower than future housing prices. How does that affect affordability?”
Most metropolitan areas have more vacant land than last year. A total of 24 of the 30 metros surveyed saw a decrease in parcel supply, down from 29 in the third quarter.
Phoenix, Nashville and Charlotte added the most lots year over year. At the same time, these markets recorded annual increases in housing starts of 47%, 13%, and 4%, respectively.
On the other hand, Orange County, California has the tightest lot supply in the United States, with an index value of 16.9, down 55% from the previous year.
Miami and San Diego also have tight land inventories, illustrating geographic and topographical limitations on land and site development.
upcoming lots
Zonda also analyzes “upcoming land,” which includes future land through various stages of development, from undeveloped land to developed land. Future lots are typically delivered over the next 12 to 18 months. The total number of upcoming lots in Q4 2023 was down 20% year over year and down 2% from Q3.
“Context is important when looking at the entire upcoming lot,” Wolf said. “Although the latest data shows a notable setback, total future sales are still 11% higher than the same period in 2019. For context, new home sales ended the year exactly on par with 2019 levels. Current zoning developments are supporting modest growth in the new housing market, but not large-scale growth.”
The New Housing Land Supply Index is a residential real estate index based on the number of vacant lots for single-family development and the rate at which those vacant lots are absorbed by housing starts.
