Nearly two-thirds of builders surveyed as part of the NAHB/Wells Fargo Housing Market Index (HMI) indicated the supply of lots is either “low” or “very low.” While fewer builders reported shortages than in 2023 and 2024, the share of builders experiencing a shortage—64%—is higher than any time NAHB has tracked data since 1997 and 2016.
The HMI survey also asked builders to rate the supply of A, B, and C lots individually as shortages tend to be most acute in the most desirable locations. The survey indicated 67% of builders said the supply of A lots was low or very low, compared to 62% for B lots, and 52% for C lots.
The data from the NAHB supports recent findings from Zonda’s New Home Lot Supply Index (LSI) for the second quarter of 2025. While Zonda’s data indicates lot supply reached its highest level in five years during the second quarter, the national market remains “significantly undersupplied.”
The shortage seems particularly severe when the overall starts pace is taken into account. Over the past three years, the annual starts rate has been under 1.5 million (approximately the long-run average from 1970 to 2000) while the share of builders reporting a low availability of lots has not dipped below 64% in the same period, according to the NAHB.
While the national market remains undersupplied, the development pipeline for future lots is growing. According to Zonda’s LSI, the number of lots in various stages of development increased 7.6% in the second quarter compared to the same period in 2024. Nearly 400,000 lots are in the excavation stage and are expected to be ready for building in the first half of 2026.
“We don’t have a glut of supply, but conditions are in place for the market to absorb additional homes,” says Zonda chief economist Ali Wolf.
