The U.S. housing market continues to rebalance after the pandemic boom, with new data showing a sharp increase in lot supply across major metro areas.
Pandemic Boom Drove Supply to Historic Lows
During the pandemic housing boom, “we saw red-hot housing demand quickly absorb much of the available slack in the housing market.” In 2021, “active housing inventory for sale, unsold completed new builds, and available lot supply all plunged to historic lows.”
At the height of that surge, builders were “buying as much entitled land as they could find.” Zonda’s New Home Lot Supply Index hit “the all-time low of 35.8 set at the height of the pandemic housing boom in Q2 2022.”
Lot Supply Rebounds as Housing Slack Builds
“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.”
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,” shows a clear shift.
“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.”
In Q4 2025, “that index reading climbed to 81.6—well above the all-time low of 35.8.” According to Zonda, “homebuilder lot supply loosened/rose in 28 of the 30 major metro-area housing markets tracked over the past 12 months.”
Austin and Denver Now ‘Significantly Oversupplied’
Among the markets experiencing “some of the most significant year-over-year loosening of lot supply” were Austin, Atlanta, Denver, Dallas, L.A., Seattle, and Jacksonville, Florida.
Despite the broader rise in lot availability, “around half of major housing markets are still what Zonda considers ‘significantly undersupplied.’”
However, “Zonda now considers Austin and Denver metro-area housing markets as ‘significantly oversupplied.’”
One year ago, “just three major metro-area housing markets were ‘appropriately supplied’ in terms of lot/land supply—Austin, Atlanta, and Dallas—and none were classified as ‘slightly oversupplied’ or ‘significantly oversupplied.’”
“Fast-forward to the latest reading, and 10 of the 30 markets now fall into the ‘appropriately supplied’ category or higher.”
How Zonda Classifies Lot Supply
Zonda’s New Home Lot Supply Index includes five groupings:
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“Significantly oversupplied” = 125 score or higher
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“Slightly oversupplied” = 115–124 score
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“Appropriately supplied” = 85–114 score
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“Slightly undersupplied” = 75–84 score
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“Significantly undersupplied” = 74 score or lower
The shift in classifications underscores how quickly conditions have changed since the peak of the housing boom.
Demand Pressures and Builder Response
“Policy uncertainty, the current cost of living, student loans, labor market concerns, interest rates, home prices, changes to immigration, geopolitics, and more have all slowed consumer demand,” wrote Ali Wolf, chief economist for Zonda and NewHomeSource, on February 9.
“When consumers aren’t happy, builders aren’t happy, and that’s exactly what we are seeing in the data.”
“Builders have scaled back starts in response to slower sales, which by extension has allowed for lot supply to grow
