Will The Current Lot Shortage Hinder Construction Sector Prosperity?

The private construction and residential building industry is ready to get back to work. Though there are a growing number of public and commercial building projects helping in the slow revival of U.S. construction, there’s a major setback that’s hindering homebuilding: a shortage of developed lots.

According a NAHB survey conducted last month, 62% of builders have reported a notable lack of buildable lots in their area. This amounts to just a 2% increase from last year, and only a 43% increase from 2012, showing that this issue has been slow to reach substantial improvement—and subsequently remains a hindrance to the housing recovery.

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NAHB: Lot shortage crippling housing recovery | Construction Dive

“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.”

Has a lingering shortage of developed lots becoming an issue in your area? Tell us more in the comments.