Pandemic housing boom tightness fades as housing market lot supply rises

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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 and Mountain West.

Look no further than Zonda’s “New Home Lot Supply Index,” which measures lot supply based on the number of single-family vacant developed lots and the rate at which those lots are absorbed via housing starts. 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 in Q2 2025 climbed to 68.4—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.

“The timing of land and lot deliveries is a growing challenge in today’s housing market,” wrote Zonda chief economist Ali Wolf on August 12. “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 five-year high in Zonda’s Lot Supply Index, as fewer lots were converted into starts.”

According to Zonda, homebuilder lot supply loosened/rose in 22 of the 30 major metro-area housing markets tracked over the past 12 months.

Housing markets like Tampa, Florida; Austin; Nashville; and Charlotte, North Carolina, experienced some of the most significant year-over-year loosening of lot supply.

That said, despite an uptick in available lots in some markets on a year-over-year basis, most housing markets are still what Zonda considers “significantly undersupplied.”

Zonda’s New Home Lot Supply Index has five groupings:

• “significantly oversupplied” = plus 125 score
• “slightly oversupplied” = 115 to 124 score
• “appropriately supplied” = 85 to 114 score
• “slightly undersupplied” = 75 to 84 score
• “significantly undersupplied” = below 75 score

According to Zonda, three major metro-area housing markets now are “appropriately supplied” for lot/land supply: Austin, Atlanta, and Dallas.

Note: If Zonda had analyzed more than 30 markets, the count would likely have been higher than just three—especially in some softer pockets of Southwest Florida.