Demand for Residential Land Plummets as Builders Pull Back, John Burns Research Says
Brokers report two-thirds drop in lot demand over two years even as lot prices rise modestly in prime locations and renegotiations surge
Demand for residential land has collapsed over the past two years, dealing a major blow to the housing supply pipeline as homebuilders grow more cautious, according to research by John Burns Research & Consulting.
The firm found that demand for land has decreased by roughly two-thirds since 2023 and that fewer than 30% of brokers report strong demand for land plots — a figure the company said is down 76% compared with a year earlier. Nationally, just 2% of brokers described the land market as "on fire" in the second quarter of 2025, a roughly 10 percentage-point decline from the same period last year. Four percent called the market "cold," 27% described it as "lukewarm," 41% said it was "warm," and 26% labeled it "hot."
Despite the slide in demand, lot prices rose modestly in the second quarter of 2025, increasing about 6% in the best locations and roughly 4% in less desirable areas, John Burns reported. The firm said lower construction costs and stronger interest in developed lots have helped sustain price increases in some markets. At the same time, brokers reported a sharp rise in deal renegotiations and cancellations, with as many as 80% of transactions being revisited.
Brokers quoted by the consulting firm described a standoff between cautious builders and sellers holding out for higher prices. "I sense our market is in a bit of a standoff," an unidentified broker in Boise, Idaho, told John Burns. "Builders are being more cautious, and sellers are not conceding on prices." A broker in San Diego said the market had "deteriorate[d] quickly," adding that slower absorptions and higher required returns for builders were limiting what developers can pay for lots.
The downturn in lot demand follows a period of unusually strong activity during 2020 and 2021, when pandemic-era dynamics boosted demand for single-family homes and the land on which to build them. John Burns said the land market peaked again in 2024 before beginning to slide in the fourth quarter of that year and continuing to trend downward through mid-2025.
The changing land market is unfolding amid wider strains in the U.S. housing sector. High home prices and elevated mortgage rates have kept many potential buyers on the sidelines, while some sellers have preferred to delist rather than reduce asking prices. Builders, facing tighter margins and weaker demand, have slowed construction in some regions.
Realtor.com senior economist Jake Krimmel summarized the equilibrium as broadly unsatisfactory: "It's the Anna Karenina housing market: Everyone is unhappy, but each in their own way," he said, reflecting frustration among buyers, sellers and builders for different reasons.
Analysts say the decline in land demand could constrain future housing supply if builders continue to defer or cancel projects. The combination of softened buyer demand, sellers unwilling to lower price expectations for undeveloped land, and higher returns required by builders has created what some brokers characterize as a market standoff that may take time to resolve.
John Burns' findings underscore regional variation: some corridors and higher-quality, developed parcels remain appealing to buyers and have seen price gains, while many undeveloped and more marginal lots face weak interest. The consulting firm said that market participants should expect protracted negotiations and a higher incidence of deal write-offs as the sector adjusts.
For now, the land market's mixed signals — modest price gains in prime locations offset by plunging demand and frequent renegotiations — complicate planning for builders and investors and could slow the pace at which new housing reaches the market.
(Reporting based on research by John Burns Research & Consulting.)