Publicly traded U.S. homebuilders purchased 66% of U.S. finished lots last quarter, according to John Burns

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In the housing sector, a finished lot refers to a parcel of land that has been prepared for home construction. It includes infrastructure improvements—such as permits and zoning, grading and leveling, road access, and essential utilities—and is ready for building.

Finding out who is buying up these finished lots gives us an idea of the type of homebuilding in the pipeline.

According to the top-notch housing analysts over at John Burns Research and Consulting (JBREC), these groups bought the most U.S. finished lots in Q3 2024:

Public builders —> 66%

Private builders —> 28%

Investors —> 2%

Build-to-rent —> 5%

(Rounding is why the percents above total over 100%)

The data reaffirms two BIG housing trends heading into 2025:

1. Giant homebuilders keep eating up more market share. As ResiClub has noted many times, publicly traded homebuilders have been taking market share for decades. Back in 2005, publicly-traded homebuilders made up 25% of U.S. new home closings. That figure slowly ticked up to 37% by 2019. However, the recent mortgage rate shock has coincided with publicly traded homebuilders' market share spiking to 51% in 2023. Zonda chief economist Ali Wolf predicts it could soon top 60%.

2. Built-to-rent is here to stay. Nationally, 5% of finished lots last quarter were bought to be used for built-to-rent developments. The highest share was in Florida (9%) and the Southeast (9%). (It’s possible, of course, that some of the other buyers will also end up using the lots for built-to-rent, meaning the actual percentage could be even higher.).

Pandemic Housing Boom inventory Vs. today's housing inventory

LEFT MAP: Active housing inventory for sale in November 2021 compared to pre-pandemic November 2019

RIGHT MAP: Active housing inventory for sale in November 2024 compared to pre-pandemic November 2019

Why did active housing inventory for sale FREE-FALL in 2020-21?

Housing demand surged rapidly amid ultralow interest rates, stimulus, and remote work boom. The Fed estimates "new construction would have had to increase by roughly 300% to absorb the pandemic-era surge in demand.” Unlike housing demand, housing supply isn’t as elastic and can't quickly ramp up. As a result, the heightened demand (2020-21) drained the market of active inventory + home prices overheated.

As the map on the right shows, the housing market is slowly digging out of that inventory hole. Active inventory in many markets around the Gulf and Mountain West regions has already bounced back.

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