Lot values for single-family detached spec homes rose to a new high in 2023, according to an NAHB analysis of the Census Bureau’s Survey of Construction (SOC) data. The median lot value for homes started in 2023 was $58,000, though overall inflation outpaced lot appreciation during the calendar year. When adjusting for inflation, the median value of lots sits just below values during the housing boom of 2005 and 2006, according to the NAHB.
It is important to keep in mind that new spec home construction experienced dramatic shifts towards smaller lots in recent years. Since the housing boom of 2005-2006, the share of lots under 1/5 of an acre rose from 48% in 2005 to 65% in 2023. So even though current median lot values are not record high in real terms, they reflect a very different mix of lots compared to the housing boom years or even a decade ago.
The fact that lot values keep rising as their sizes shrink reflects ongoing challenges builders face in obtaining lots. Even though lot shortages are not quite as widespread as they were in 2021, their current incidence recorded by the May 2023 survey for the NAHB/Wells Fargo Housing Market Index (HMI) is the second highest on record since NAHB began collecting this information in 1997.
There is a substantial variation in lot values and appreciation across the US regions. New England has been a division with the most expensive lots for decades. Most recently, it has been in a league of its own with its median lot prices more than tripling the national medians in 2023. As of the latest SOC data, half of all single-family detached (SFD) spec homes started in New England in 2023 were built on lots valued at or over $200,000. New England is known for strict local zoning regulations that often require very low densities. It is not surprising that typical SFD spec homes in New England are built on some of the largest and most expensive lots in the nation.
