Zillow Analysis: 300,000 Empty Lots Offer Path to Dent Housing Deficit

Zillow Analysis: 300,000 Empty Lots Offer Path to Dent Housing Deficit

More than 300,000 empty lots currently listed for sale across the United States could significantly reduce the nation’s housing inventory gap if developed, according to new research from Zillow Group, Inc.. The real estate platform’s analysis suggests that constructing a single home on each available lot of five acres or less would shrink the estimated 4.7 million unit housing shortage by approximately 6.3%.

As of June, Zillow recorded 300,242 lots for sale, accounting for 17.4% of all for-sale listings on the site. The typical listed lot spans 0.57 acres. Under zoning regulations permitting greater density, this land area could potentially accommodate multiple homes, implying that the projected impact on the housing deficit may be conservative.

The availability of these lots varies widely by region. Florida leads the nation with 42,601 listings, followed by Texas with 40,907 and California with 18,508. However, when measured by the share of total listings that are lots, rural states dominate. North Dakota tops the list, where lots comprise 45.9% of all listings, followed by South Dakota at 38.7% and Alaska at 34.6%.

Location also dictates cost, creating distinct feasibility profiles for builders. Nationally, the median listed lot sits at a price point of $79,000. However, market snapshots show a steep curve: the median price per acre is roughly $75,000 in rural markets, climbs to more than $181,000 in suburban areas, and reaches approximately $500,000 in urban zones.

Despite the inventory, Zillow economists note that regulatory and financial barriers prevent immediate development. Zoning restrictions, density limits, and lengthy permitting timelines often prevent smaller projects from penciling out. Additionally, financing remains fragmented for consumers and small builders, particularly for lower-cost construction in rural areas.

The report points to recent federal initiatives, such as the 21st Century ROAD to Housing Act, as potential catalysts for change. Legislation aimed at modernizing zoning and streamlining permitting could unlock these “infill” opportunities. Zillow also highlighted manufactured housing as a viable method for developing these lots faster and more cost-effectively than traditional site-building.

Zillow Group, Inc. traded lower recently, with shares down 3.54% from the previous close.

What to watch

• Progress on federal housing bills like the 21st Century ROAD to Housing Act.
• Local zoning reforms in high-concentration states like Florida and Texas.
• Trends in financing availability for small-dollar construction and land acquisition.

Source: original release