NAHB: Lot Shortages Holding Back Recovery

As the market trudges toward recovery, housing starts remain depressed due to a shortage of vacant lots, according to the ""National Association of Home Builders"":http://www.nahb.org/default.aspx (NAHB).

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Housing starts reached an annual rate of 900,000 in the latest Census data, which while up from a low of 550,000 in 2009, is still below the historical average of 1.5 million maintained from 1960 to 2000.

""Lot shortages are one of several barriers that have arisen, restraining builders from responding completely to increased demand,"" said David Crowe, chief economist for NAHB.

In an ""August survey,"":http://www.nahb.org/news_details.aspx?newsID=16444 the NAHB found that 59 percent of builders say the supply of lots in their area is either ""low"" [COLUMN_BREAK]

or ""very low."" The 59 percent marks a high for the monthly survey, which began in 1997.

""One reason is that many residential developers left the industry, abandoned certain markets or simply stopped buying land and developing lots during the downturn,"" Crowe said.

A minority, about 14 percent of builders, said there is a ""high"" or ""very high"" supply of lots in their area, according to the NAHB survey.

The shortage of lots is apparently greater among more desirable lots, according to survey results. Thirty-four percent of survey respondents said the supply of the most desirable lots is ""very low,"" while only 12 percent of respondents said the least desirable lots are in ""very low"" supply.

These lot shortages translate to higher prices, which are passed on to homebuyers, according to NAHB.

""There is still a substantial pent-up demand for housing waiting to be unleashed as the overall economy and labor situation improves,"" Crowe said.

However, lot shortages, along with other obstacles, including ""a shortage of labor in carpentry and other key building trades, limited availability of loans even for credit worthy home builders and home buyers; and, more recently, an uptick in interest rates,"" may deter some momentum in the housing recovery for the time being, according to NAHB.