Economists' Outlook

Housing stats and analysis from NAR's research experts.

Demand for Residential, Industrial, and Recreational Land Increases During the Pandemic

Land sales rose at a healthy pace in 2020 compared to the collapse in transactions of commercial real estate structures, according to the latest report of RLI and NAR 2020 Land Market Survey Report, good news on Earth Day! On average, 314 respondents1 who reported they had land transactions in 2020 reported that their land sales rose 3% in 2020, which stands in stark contrast to the overall decline of 32% in commercial real estate acquisitions in the wake of stay-at-home and work-from-home regulations and advisories from federal and state/local governments and businesses.

Table, line graph, and bar chart: Percent Change in Land Sales Compared to Commercial Real Estate Sales, 2014 to 2018

Land Market Drivers: Housing Market, E-commerce, and Nature-based Recreation

Respondents reported the strongest increase in residential land sales of 6% on average, followed by sales of land for industrial use at 4%, and recreational and ranch lands, each at 3%.

The strong demand for residential land followed the strong homebuying activity. Existing-home sales rose 5.6% in 2020, propped up by low mortgage rates, with the 30-year fixed-rate declining to an average of 3.11% in 2020 from 3.94% in 2019.

Sales of land for industrial use are being driven by the continued shift towards electronic and mail-order shopping, with sales now accounting for 16% of retail sales from just 13% in 2019.

Sales of recreational land rose, likely on account of the value for nature- and rural-based recreational activities as people turned to recreational activities and away from urban-based recreational activities like dining, shopping, and going to the movies. NAR's monthly REALTORS® Confidence Index Survey also showed more of a rising share of home sales for vacation homes and homes in the suburbs. In 2020, 83% of homes sold by REALTORS® were in the suburbs, an increase from the 80% share in 2019. Vacation home sales accounted for 5.5% of existing-home sales in 2020, also an increase from the 5% share in 2019.

Meanwhile, even as home sales have been rising, demand for timber land remained flat in 2020. Timber production declined in 2020 due to COVID-19-related work stoppages and falling U.S. wood exports. Wood products exports fell 10% in 2020 as the global economy shrank by 4.4%.

Table and bar chart: Average Percent Change in Dollar Land Sales by Property Type

Land Sales Expected to Continue to Increase in 2021 But Zoning Regulations Pose Constraint to Residential Land Development

Respondents expect an increase in land sales of 2% in 2021. Respondents expect the strongest price growth for industrial and recreational land, each growing at 3% in 2021. However, they expect sales of land for office, retail, and hotel use to decline by about 1% as the vacancies in office, retail, and hotel remain elevated in 2021, with a stronger recovery only by 2022 and beyond. Even then, an increase in the fraction of workers working from home, expected to hover at around 10% based on an NAR Real Estate Forecast Summit panel of economists2, or nearly double the 6% share of workers who worked full-time prior to the pandemic.
Bar chart: Average Expected Change in Dollar Land Sales Over the Next 12 Months Among NAR Members, by Property Type

While sales of residential land will underpin the land market's growth, respondents reported that residential land sales are being constrained by the lack of developed lots, with 70% of respondents reporting very few developed residential lots. The majority of respondents, at 61%, also reported that zoning ordinances have become more difficult in the past five years and this has impacted residential land development (likely for multifamily and mixed-use development).

Bar chart: Availability of Vacant Developed Residential Lots in Market Relative to Demand
Bar chart: Changes in Land Zoning Ordinances & Regulations for New Residential Development Over the Past 5 Years

1 The responses are gathered through the Commercial Real Estate Quarterly Market Survey that NAR conducts in collaboration with the Realtors® Land Institute (RLI), CCIM, SIOR, IREM, and Counselors of Real Estate.

2 NAR Real Estate Forecast Summit, December 2020,