As affordable housing becomes more difficult to come by, fewer people are buying up to land to build their dream homes.
The demand for land has significantly decreased by two-thirds in the last two years as the housing market continues to struggle.
Less than 30 percent of brokers say they have a strong demand for land plots, which is down 76 percent compared to a year ago, according to research done by John Burns Research & Consulting.
The land market is only ‘on fire’ for roughly two percent of brokers nationally in the second quarter of 2025, a 10 percent shift from the same time last year.
Four percent of brokers consider the market ‘cold,’ while 27 percent found it ‘lukewarm’.
However, not all is lost, as 41 percent of brokers found it to ‘warm’ and 26 percent found it to be ‘hot’ in the second quarter of this year.
The market was hot during the pandemic years – 2020 and 2021 – before seeing a rapid downward shift as America began pulling out of isolation.
It peaked slightly in 2024, but started to decline again in the fourth quarter and continues to trend downward, the consulting company found.
The demand for land has significantly decreased by two-thirds in the last two years as the housing market continues to struggle
Less than 30 percent of brokers say they have a strong demand for land plots, which is down 76 percent compared to a year ago, according to research done by John Burns Research & Consulting
‘Lot prices have been slow to adjust to declining builder profitability,’ the company said.
Lot prices rose six percent in the second quarter this year in the best locations and four percent in less desirable areas.
Part of the reason the prices have seen a small up is due to construction cost being lower, allowing land buyers to pay a little extra for the plot.
Developed land is also in higher demand, which has also encouraged the price increase.
Brokers are also seeing more buyers renegotiate prices and cancel transactions, with up to 80 percent of them doing it, the consulting company found.
‘I sense our market is in a bit of a standoff,’ an unidentified Boise, Idaho broker told the company. ‘Builders are being more cautious, and sellers are not conceding on prices.’
A San Diego, California broker said they’ve watched the market ‘deteriorate quickly’.
‘Absorptions are down, and builders are raising their required returns, thereby affecting the prices they can pay,’ they said.
The land market is only ‘on fire’ for roughly two percent of brokers nationally in the second quarter of 2025, a 10 percent shift from the same time last year
Four percent of brokers consider the market ‘cold,’ while 27 percent found it ‘lukewarm’
Lot prices rose six percent in the second quarter this year in the best locations and four percent in less desirable areas
‘I sense our market is in a bit of a standoff,’ an unidentified Boise, Idaho broker told the company. ‘Builders are being more cautious, and sellers are not conceding on prices’
The market has shifted toward buyers, but they still need to have patience while navigating the transaction as undeveloped land sellers are holding out for a high-priced payout.
The US housing market has been enduring a ‘cruel summer’ – leaving buyers, sellers, and builders equally frustrated.
High prices and soaring mortgage rates have forced many would-be buyers to remain on the sidelines.
Meanwhile, sellers have decided they would rather delist their home entirely than budge on the price that they have in mind.
Homebuilders are feeling the pinch too, slowing construction as the market stalls.
‘It’s the Anna Karenina housing market: Everyone is unhappy, but each in their own way,’ said Realtor.com senior economist Jake Krimmel.
In other words, buyers, sellers, and builders each face unique challenges, yet the result is widespread dissatisfaction across the market.
