Median single-family lot prices in 2018 outpaced inflation (4.4% vs 2.4%) and reached a new record high, with half of the lots selling at or above $49,500, according to NAHB’s analysis of the Census Bureau’s Survey of Construction (SOC) data.
The most dramatic rise in lot values was observed in the West South Central division where median lot values more than doubled since the housing boom years.
While this constitutes a new nominal national record, lot values adjusted for inflation have not reached the housing boom peak levels. During the building boom – when twice as many single-family homes were started – half of the lots were selling above $43,000, which is equivalent in purchasing power to more than $53,000 in 2018.
A Geographic Breakdown
The West South Central division – which includes Texas, Oklahoma, Arkansa and Louisiana – stands out as a division where new historical records were hit not only in nominal terms but also when adjusted for inflation. Compared to the peak years of the housing boom, lot values more than doubled in this division.
Historically, lot values in the West South Central division have been the lowest in the nation. They started rising in 2013 and by 2015 caught up with the national median. As of 2018, half of the lots in the West South Central division sold for more than $62,000, 25% above the national median lot value for single-family spec homes of $49,500. This represents a significant jump in the division lot values since the building boom when more than half of lots were priced under $30,000.
Single-family spec homes started in New England are built on some of the most expensive lots in the nation. Half of all sold single-family homes started in New England in 2018 reported lot values in excess of $140,000, a new nominal record for the division. New England is known for strict local zoning regulations that often require very low densities. Therefore, it is not surprising that typical single-family spec homes started in New England are built on some of the largest and most expensive lots in the nation.
The Pacific division has the smallest lots. However, the median lot value reached $87,000 in 2018, the second most expensive value in the nation and a new nominal record for the division. As a result, the Pacific division lots stand out for being most expensive in the nation in terms of per acre costs.
The East North Central is another division that hit a new record high, with half of the lots priced above $52,000, exceeding the national median lot value for single-family spec homes.
The East South Central Division that has the second largest lots in the nation simultaneously reports the lowest median value of $38,000 per lot, thus defining the most economical lots in the nation as well as lowest per acre costs.
This analysis is limited to single-family speculatively-built homes by year started and with reported sales prices. For custom homes built on owner’s land with either the owner or a builder acting as the general contractor, the corresponding land values are not reported in the SOC. Consequently, custom homes are excluded from the analysis.
NAHB economist Natalia Siniavskaia provides more analysis in this Eye on Housing blog post.