Single-Family Homes: Tear it Down or Fill It In
The lack of developable land is likely to boost infill development and helps explain its relatively high 25% market share.
One-fourth of new single-family detached homes were built on infill lots or were constructed after teardowns, according to the latest Annual Builder Practices Survey, which the National Association of Home Builders highlighted in a recent post.
Homes built on infill lots constituted 18.6% of new homes, while homes built after tearing down an existing building constituted 6.4% of new homes. Another way of stating it was that one in four new single-family detached homes were built in established neighborhoods in 2020.
The lack of developable land is likely to boost infill development and helps explain its relatively high market share. Given the record high lot shortages reported by the September 2021 survey for NAHB/Wells Fargo Home Market Index (HMI), new homes built on infill lots will likely command a growing share.
Market share of homes built on infill lots varies greatly by geography, with a share of nearly 25% or more in New England, the Middle Atlantic and the Pacific but barely 12% in the Midwest. Teardowns follow similar suit, with a share of 10% or more in New England, the Pacific and the East South Central.
The substantial regional differences in the market shares of teardowns reflect the diverse age of the housing stock, distinctive climate effects on housing durability, as well as varying severity of developable land and lot shortages in different regions.
The majority (63%) of new single-family detached homes built in 2020 were in new residential developments. Nationwide, the remaining 12.4% of new single-family detached homes built in 2020 were not in a residential development.