Lot Shortages Impacting Builders; Buyers Feeling Challenges

Builders have been dealing with high cost of supplies, like lumber and appliances, along with a shortage of said materials and labor challenges.

Now, there is a lot shortage, reports the National Association of Home Builders. According to the organization, 76% of builders said that the supply of developed lots in their community is low to very low, an all-time record in nearly 25 years. Builders are reporting the most shortages in areas deemed the most desirable but are still finding lots in even less desirable places hard to find.

Builders’ difficulties obtaining their needed materials is impacting buyers’ perceptions of the affordability of the housing market as well. It has been widely reported the challenges facing the home building industry. In the third quarter of 2021, NAHB found that 73% of buyers reported they could afford less than half of the available homes on the market in their area, an increase of 4% from the second quarter. Buyers are also expecting that finding a house will remain as challenging as it is, or get even harder, said 66%. About 60% said they see fewer or about the same number of homes on the market.

With a rising number of first-time prospective buyers (60%, according to the survey), but a decreasing number of overall prospective buyers, millennials represent the biggest percentage of a generation looking, at 64%, followed by Generation X at 48%. About two-thirds of buyers reported looking for three or more months for a house. The majority of prospective buyers remain prospective because they keep getting outbid (45%) or they can’t find an affordable home (36%).

But buyers remain persistent. About half said they will continue looking in their desired area, while about 40% plan to expand their search area and keep looking.