By: Will White, Land Advisors Organization (Tucson)
TUCSON, AZ (November 26, 2025) -- Holiday season is now upon us. A great time of year to reflect and look forward at the same time. 2025 has been a story of good news/bad news for Tucson’s housing and land market, and one that puts it in familiar territory. Homebuilders have weathered the storm and focused on inventory control and moving product. They were effective at both. However, the land component lacked horsepower until recently and was sidelined by another 6-month pause. The good news is that buyer demand is definitely there, traffic is picking up, and builders did a nice job navigating this market. This good news, perhaps, inadvertently has created the bad news. The region is behind again on the production of new land and lots, and the challenge to get ahead of that gets tougher all the time.
SUPPLY-DEMAND: BY THE NUMBERS
The October data shows builders at 2,557 permits year-to-date through October, with closings at 3,009. That gap should concern everyone. Median new home price is holding around $390,000, with the average at $487,000. Permit activity is down 32% year-over-year, which shows builders careful to overbuild but also how tight the lot supply and community count is getting to the market and the builders.
Here's the math: several builders are still selling around 40 homes per month, which is fueling the lot burn of their communities. That's simply not sustainable without buying more land to reload this accelerated pace. The mode right now appears to be sell housing inventory and push volume. The challenge? At some point, you run out. They need to put homes in the ground for the selling season, and this even burns through the lots faster. Builders need to reload this land to avoid a long gap out. We think land positioning and deal-making is underway and accelerates into the new year. It's not a foreign concept – at the grocery store, at some point, the apples sell, then the store orders more inventory so they don't run out of apples to sell.
October's Land Wake-Up Call: October was a strong momentum builder in Metro Tucson, both in housing and land. Builders closed on new lot deals market wide and, in the past 30 days alone, approximately 1,300 lots were put under builder control to close in 2026. That number showcases a proactive approach that will pay dividends. These builders positioned themselves ahead of the curve, while others sit back and continue to observe.
The momentum in northwest Tucson and Vail markets is now undeniable. The biggest news was Ashton Woods/Starlight purchase at Monarch with Sunbelt Holdings – three phases totaling 350 finished lots for $37 million. Combined with their Star Valley acquisition, Ashton Woods/Starlight now controls 605 lots in Tucson. This major investment puts them as the largest lot buyer in the Tucson region in 2025. What is more interesting is that these were 605 lots that did not go to other Tucson builders. We see this as a trend. With Tucson's large builder market shares evolving, this leaves room for new home builders to enter solely through organic land acquisition.
THE NEW ERA of “FARM-TO-TABLE” LOT DELIVERY AND INFRASTRUCTURE
Here's where the market is shifting in another major way. Lot buying going forward will focus on finished lots and fully entitled, delivered lots, using a "farm-to-table" approach. This means developers will take care of processing the land, managing construction, and limiting risk for the homebuilders. It's a new era of lot delivery.
Builders want to expedite and be efficient. They don't want to manage dirt, deal with engineering headaches, or navigate the infrastructure maze. They want to show up, buy ready lots, and start building homes. Period. The largest Tucson master developers understand this. They're positioning themselves to deliver turnkey solutions where builders can walk onto a pad and get to work. Over the next few years, homebuilders will rely on developers more and more to prepare the lots, as Infrastructure remains the largest regional challenge.
Builders will go where it's easy and fast and where infrastructure is abundant. But here's the real question heading into 2026: what is available next year? By available, we mean fully engineered and ready to go. Not "we're working on it" or "it should be ready in 18 months." We mean shovel-ready, finished lots that builders can close on and start vertical construction immediately.
The answer? Not much. And that's the problem.
THE PERFECT STORM: FOUR CATALYSTS CONVERGING IN 2026
Here's what's coming in 2026: homebuilders will likely accept lower margins in exchange for higher volume. The way to get more volume is simple – open more stores. And opening more stores takes buying more land. So you've got land prices staying high, margins compressing, but volume increasing. That's the trade-off builders are going to most likely make.
This creates a perfect storm of components that will drive land buying in 2026:
First, there's the reload urgency for 2027. Builders are still volume-selling and burning through current inventory. They know the math – if they don't buy in 2026, they'll have nothing to deliver in 2027 and beyond. Most programs for homebuilders are spec-based, which means permits should jump soon – they have to. But here's the catch: builders have lots now through Q1 2027 at best, and lot development is taking 15+ months plus transaction time to acquire the land. Do the math. If you're not buying now, you're playing musical chairs with a shrinking number of seats.
Second, a stronger selling season is being predicted for 2026. Momentum is building, buyer demand is steady, and the market fundamentals are pointing in the right direction. Any additional catalysts to the consumer, and we have a very different picture on our hands.
Third, we're going to see the slingshot effect. You've got builders sitting on the sidelines right now, watching and waiting. But the second demand accelerates and the selling season kicks into gear, all builders will be back in the game simultaneously. It's Tucson's predictable pattern – everyone moves together. Here's what makes Tucson predictable: it's dominated by public homebuilders, so the reactive nature is the same for all of them. When demand pulls back, everyone pulls back together. When demand returns, everyone rushes back in together.
Fourth, land banking will become more prevalent, allowing builders to buy more and hold assets off their books. This structure lets builders control more inventory without the balance sheet impact, which means they can play bigger and faster.
Put all of this together, and you've got multiple components converging at the same time in 2026. Builders who wait are going to find themselves competing against not just the usual suspects, but also against builders who've been sitting tight and are ready to pounce. And they'll all be competing for the same limited pool of finished or ready now lots.
The builders who locked up those recent 1,300 lots? Nice work. They understood the timeline. They knew that what's available today won't be available tomorrow, and what gets delivered in 2026 needs to be secured now.
In Summary, Don’t Be Late to the Holiday Party!
Keeping the holiday theme, think about it like your company's holiday party. Show up fashionably late, and you might still get a decent plate. But show up really late? You're stuck with the picked-over veggie tray, warm punch, and the bar is closing. That's where the reactive builders are heading – except instead of holiday food, they're getting no lots, higher prices, and a two-year wait to deliver homes.
We've got scarce supply, renewed demand, infrastructure constraints that won't be solved quickly, and a finite window before builders run out of runway. Add in the margin-for-volume trade, reload urgency for 2027, land banking becoming more prevalent, and the slingshot effect of everyone jumping back in simultaneously – and you've got yourself a powder keg.
The question isn't whether builders will need to buy land in 2026. The question is: what's actually available? What's fully engineered and ready to go? Builders telling you they're okay on inventory past mid-2027? Be skeptical.
There is a lot to be optimistic about as we head to 2026. Tucson’s performance was solid this year on the sales side, and moving a lot of inventory. The fundamentals are strong with tight supply and healthy buyer demand, and there are several levers that could be pulled to boost the consumer into the selling season. However, on the land side, the music is playing, the chairs are disappearing, and 2026 is going to separate the proactive from the reactive real quick. Either way, let's get the party started!