Home construction is on pace to hit a post-recession high this year, but a fundamental problem is preventing an even sharper ramp-up: a shortage of places to put the units.
Builders are increasingly complaining of a dearth [shortage] of developed lots, a crunch that’s becoming more prominent as housing starts pick up. They blame restrictive regulations, limited financing for lot development and buyers’ growing preference to live in or near cities, where there’s little unused land.
“It’s likely limiting the number of new homes for sale,” says David Crowe, chief economist of the National Association of Home Builders (NAHB). And, he adds, tighter supplies are “raising the price of a house.”
New home sales fell 11.5% in September, the Commerce Department said Monday, but they’re still up 18% for the year and builders’ sales expectations are at a 10-year high. NAHB expects 1.1 million housing starts this year, which is up from 1 million in 2014 and the most since the 2007 real estate crash, but still short of the 1.5 million historical average.
One reason starts aren’t accelerating faster is the shortage of developed lots. Typically, a developer installs infrastructure such as roads, water and sewer lines on a vacant parcel of land and sells the tract to a builder who then constructs a subdivision. Earlier this year, 57% of builders said they expect the cost and availability of developed lots to be among their most significant problems in 2015, up from the 46% who rated it a big issue in 2013.
Among the reasons: read more —> http://www.usatoday.com/