Homebuilder lot supply jumps so fast that 2 housing markets are now 'significantly oversupplied'

"During the pandemic housing boom, we saw red-hot housing demand quickly absorb much of the available slack in the housing market. Back in 2021, active housing inventory for sale, unsold completed new builds, and available lot supply all plunged to historic lows. But ever since the pandemic housing boom fizzled out in mid-2022, housing slack has been building back up in the housing market-especially in certain pockets of the Sun Belt."

"A higher index value indicates a greater supply of single-family vacant developed lots, while a lower index value indicates a tighter lot supply/new construction market. That index reading for Q4 2025 climbed to 81.6-well above the all-time low of 35.8 set at the height of the pandemic housing boom in Q2 2022, when builders were buying as much entitled land as they could find."

Red-hot housing demand during the pandemic rapidly absorbed market slack, causing active inventory, unsold completed new builds, and available lot supply to plunge to historic lows in 2021. Since the housing boom fizzled in mid-2022, housing slack has been rebuilding, particularly across pockets of the Sun Belt. Zonda’s New Home Lot Supply Index measures single-family vacant developed lots and their absorption rate via housing starts; higher values signal greater lot supply and looser new-construction markets. The index rose to 81.6 in Q4 2025, well above the pandemic low of 35.8 in Q2 2022. Lot supply loosened in 28 of 30 major metro markets, with Austin, Atlanta, Denver, Dallas, Los Angeles, Seattle, and Jacksonville among the most loosened.

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