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New Home LSI: New home replacement lots are getting harder to find

Feb 17, 2021

The New Home Lot Supply Index (LSI) captures further tightening of finished lots as the housing market remains hot. The New Home LSI came in at 55.1 in the fourth quarter, down 11.6% month-over-month and 20.4% year-over-year.

New Home Lot Supply Index for select markets

Lot inventory in nearly every top market is currently considered seriously undersupplied.

  • The markets that tightened the most on a year-over-year basis in 4Q20 were Baltimore, San Diego, and Nashville.
  • Baltimore’s tight inventory is due to some growth moratoriums and select parts of the market that are getting close to buildout.
  • Lot demand is strong in San Diego and builders would build far more homes if the land allowed it, but the geographic barriers pose challenges.
  • Nashville’s housing market thrived throughout 2020 and early-2021 as the pandemic caused many to re-evaluate where they lived. Builders are enjoying the heightened demand but topography issues are part of the reason there aren’t more lots available.
  • Jacksonville, Raleigh, and Atlanta are the top markets for new home sales, according to our New Home Pending Sales Index. In the same markets, the New Home LSI captures a 12%, 28%, and 28%, respectively, drop in finished lots.

The housing market is incredibly hot today in virtually every metro across the country. Builders are eagerly out shopping for land to better match supply with demand.”

Ali Wolf, Chief Economist at Zonda Economics


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.

The data provided in this release are for use only by the primary recipient or the primary recipient’s publication or broadcast. This data may not be modified, resold, republished or licensed to any other source, including publications and sources owned by the primary recipient’s parent company without prior written permission from Zonda.

Ali Wolf

Chief Economist

Ali Wolf

Chief Economist

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