New Homes Likely to Get Pricier as Lot Costs Rise


Builders are facing rising lot prices due to a shortage in suitable lots, and the rising costs will likely get passed on to buyers of new homes.

The average price of a finished lot suitable for building was up 40 percent in the second quarter compared to a year ago, according to John Burns Real Estate Consulting’s analysis of 27 leading markets. In some places, the increase has been even more. For example, in San Francisco and Oakland, finished lots were up 87 percent; up 75 percent in Atlanta; and up 70 percent in Las Vegas.

The big jumps are “making up for lost ground” during the housing downturn when lot prices dropped, says David Crowe, chief economist for the National Association of Home Builders.

Finished lot prices represent nearly 22 percent of a new home’s price, Crowe says.

Source: “Higher lot prices may boost new home prices,” USA Today (Sept. 3, 2013)

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