By Stephanie Sims
The supply of empty residential lots has fallen to its lowest level in three years – according to MetroStudy and reported by Crain’s, the Chicago area’s recent level of vacant lot inventory ready for new single-family homes, townhomes or condominiums measured at 17.1 in the second quarter, down from 19.1 years in the first quarter and 22.1 a year earlier.
Builder Confidence and New Residential Home Sales
NAHB reported that homebuilder confidence has increased substantially – to its highest levels since 2006 – which contributes to the fact that the amount of buildable lots is declining because developers are building more homes: builders started 854 homes in the second quarter, up 45 percent from 589 a year earlier, according to Metrostudy.
In addition to this good news, new residential home sales increased 25.3 percent year-over-year in July to a seasonally adjusted annual rate of 372,000, according to the latest joint report from the U.S. Census Bureau and the Department of Housing and Urban Development. From June to July, new residential home sales also increased, rising 3.6 percent from June’s revised rate of 359,000.
“We’re getting more to an equilibrium point,” said Lance Ramella, director of consulting for the Midwest region of Metrostudy. “We’re not burning off inventory as much as we’re starting a house for every sale.”
Though the total number of Chicago-area lots remains high — 45,919, down from a peak of 54,409 in first-quarter 2008 — many of the best lots have already been developed, Ramella said. And, as is the case with much of the inventory that remains on the market, many of these vacant lots are in less-desirable locations, and therefore, could sit vacant for a while, he added.