New Home Lot Supply Index

Aug 12, 2025

The New Home Lot Supply Index provides an unrivaled look into the lot markets across the country, offering a current quarter snapshot as well as insight into the directional trend. This report details data for the second quarter of 2025.

Zonda’s New Home Lot Supply Index (LSI) for 2Q25, showed lot supply loosened both year-over-year and quarter-over-quarter across the United States, notching the fourth consecutive increase from previous quarters. The index is a residential real estate indicator based on the number of single-family vacant developed lots (VDL) and the rate at which those lots are absorbed via housing starts.

The New Home LSI came in at 68.4 for 2Q25, representing a 20.6% increase from 2Q24. The 2Q25 data shows a “significantly undersupplied” market nationally. The market has been “significantly undersupplied” since 2017.
On a quarter-over-quarter basis, supply increased by 6.3% from 1Q25.
The LSI counts the total vacant developed lot supply and adjusts it for overall starts activity.

“The timing of land and lot deliveries is a growing challenge in today’s housing market,” said Ali Wolf, chief economist for Zonda and NewHomeSoure. “While builders had planned to increase housing starts in 2025, they slowed production as the year progressed due to choppy consumer demand and rising resale supply. This slower pace of construction contributed to the 5-year high in Zonda’s LSI, as fewer lots were converted into starts.”

Lot supply loosened year-over-year in most major metropolitan areas in 2Q25

Despite the loosening trend, lot inventory was still categorized as “significantly undersupplied” in most markets in 2Q25.
The markets where land supply loosened the most on a year-over-year basis were led by San Francisco, LA/OC, and Tampa. Related, 2Q starts were down in each of these markets compared to this time last year.
San Diego tightened the most compared to the same time last year, falling 36.2% to 12.6, which continues to rank as the tightest lot market in the country. Government regulation is the top hurdle in San Diego. Miami is the second tightest, with an index value of 16.1, and Baltimore rounds out the top three tightest markets (20.7).
Austin, Atlanta, and Dallas were “appropriately supplied” in 2Q as the LSI loosened quarter-over-quarter. Denver and San Antonio were “slightly undersupplied.” In 2Q, both housing starts and VDLs decreased year-over-year in all five of these markets.

Zonda also records future lots through the stages of development. The stages range from raw land through streets in, which is the last step before the lot becomes a vacant developed lot. Zonda groups the last few stages into a classification called total upcoming lots, which typically indicates delivery over the next 12-18 months. The video below shows the developmental stages from an aerial view.

Total upcoming lots in 2Q25 increased 7.6% year-over-year and were flat quarter-over-quarter. Additionally, they were up 26.8% compared to the same quarter in 2019.

Among total upcoming lots, roadwork was flat year-over-year at +0.1%. Roadwork is comprised of the two smaller stages–streets paved and streets in–and represents the last step in lot development. Lots in the excavation stage were up 13.7% year-over-year, while those with equipment on site were also up 6.9%.

The largest share of total upcoming lots were in the excavation stage in 2Q25, totaling nearly 400K. These lots have an expected delivery between 1Q26 and 2Q26 (the range represents different timeframes from local entitlement processes). Note, not all of the lots in excavation will match Zonda’s estimated timeline.

“The land and lot backdrop reveals a key insight: we don’t have a glut of supply, but the market is ready to support more construction once builders feel confident again,” said Wolf.

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Methodology

The Zonda New Home Lot Supply Index (LSI) is built on proprietary, industry-leading data that covers the production new home market across the United States. The index values represent single-family vacant developed lot supply, lots that are ready to be built on, relative to equilibrium. Released quarterly, the New Home LSI provides an unrivaled look into the lot markets across the country, offering a current quarter snapshot as well as insight into the directional trend.

The New Home LSI is calculated based on each markets’ specific equilibrium as determined by our team of local experts and historical activity. The comparative current value is adjusted to capture the “true” months of supply figure by applying a greater weight to vacant developed lots in subdivisions with more starts activity. Each index value is associated with a phrase highlighting the current lot supply dynamics. A value of 100, represents perfect equilibrium, while a value of 125 and above equals “Significantly Oversupplied”, 115-125 – “Slightly Oversupplied”, 85-115 – “Appropriately Supply”, 75-85 – “Slightly Undersupplied”, and 75 and below – “Significantly Undersupplied.”

The foundation of the index is a quarterly release conducted by Zonda. It is necessary to monitor residential lot supply to understand how new home markets may be impacted by the incoming pipeline.