Chart: These 4 Major Housing Markets Have Ample Supply While 26 Are ‘Undersupplied’
Source: Fast Company, Lance Lambert
Photo: Matthew LeJune/Unsplash, Justin Wallace/Unsplash, Bryce Boehler/Unsplash, Kevin Nalty/Unsplash
Homebuilding lot-supply loosened year-over-year in 24 out of the 30 major U.S. housing markets, according to a new analysis.
On Thursday, Zonda released an analysis finding that the supply of homebuilder lots loosened in the majority of major metropolitan areas, with 24 out of 30 areas experiencing a year-over-year increase in Q4 2023.
“Current lot development [supply] is supportive of modest growth in the new home market [in 2024] but doesn’t support blockbuster growth,” wrote Zonda chief economist Ali Wolf. “75% of builders intend to start more homes in 2024 compared to 2023, and those starts require lots. The lingering issue is how today’s lot pricing plays into housing affordability going forward.”
Among the notable findings, housing markets, such as Phoenix, Nashville, and Charlotte experienced the most significant loosening of land supply on a year-over-year basis. Conversely, Los Angeles/Orange County saw the greatest tightening.
But despite some mild loosening on a year-over-year basis, most housing markets still grapple with a classification of “significantly undersupplied,” indicating challenges in meeting housing demand.
Zonda’s New Home Lot Supply Index has 5 groupings:
“significantly oversupplied” = plus 125 score
“slightly oversupplied” = 115-125 score
“appropriately supplied” = 85-115 score
“slightly undersupplied” = 75-85 score
“significantly undersupplied” = below 75 score
Among the 30 largest housing markets tracked by Zonda:
0 markets are “significantly oversupplied”
0 markets are “slightly oversupplied”
4 markets are “appropriately supplied”
3 markets are “slightly undersupplied”
23 markets are “significantly undersupplied”
The only four “appropriately supplied” housing markets for lot/land supply are Austin, Boise, San Antonio, and Minneapolis.
Zonda’s report says the year-over-year loosening in lot/land supply is a result of the mortgage rate shock-induced housing slump endured at the end of 2022. However, on a quarterly basis, Zonda says lot supply fell in Q4 2023 “as builders felt more confident [in] increasing [housing] starts again.”
https://www.fastcompany.com/91026793/housing-market-4-major-markets-supply-zonda