The latest from Zonda’s new home lot supply index

By Mary Salmonsen | Builder

Zonda’s New Home Lot Supply Index fell to 63.5 for the third quarter of 2020, down 9% from the third quarter of 2019 and 3.7% on a quarter-to-quarter basis.

The index, derived from Zonda’s home industry data, indicates the number of single-family vacant developed lots available and the rate they are absorbed. A new-home LSI value of 100 represents “perfect equilibrium” in a market. Values of 115 and above equal slightly or significantly oversupplied markets, while values of 85 or below equal slightly or significantly undersupplied markets.

Overall, Q32020’s numbers represent a “critically undersupplied market” nationwide and highlight a lack of near-term lot supply at the national level. “Lot inventory reached new lows in the third quarter and unequivocally represents a land sellers’ market,” says Ali Wolf, chief economist at Zonda. “Record low lot supply tells us it won’t be easy to backfill the land pipeline after the exceptional year for new-home sales in 2020.”

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