Land, costs and housing: A clear-eyed look at development in New Hampshire

New Hampshire faces a housing shortage of 60,000-90,000 units by the early 2030s. Existing-home inventory often sits near two months of supply — roughly 60-70% below the five-to-six-month level considered balanced. At the same time, the cost to build has become a major barrier. Land, materials, labor, site work, permitting, and infrastructure have all risen, turning projects that worked a decade ago into difficult math today.

One clear differentiator is access to municipal sewer and water. These parcels support far higher density and avoid the large lot sizes required by on-site septic, spreading fixed infrastructure costs across more homes. As a result, land with public utilities has become disproportionately valuable compared with raw land that must rely on wells and septic.

Land prices up, volume down

In the Lakes Region, the first 10 months of 2025 produced 91 vacant-land sales at a median price of $175,000. The same period in 2024 saw 141 sales at a $150,000 median. That is a 35% drop in transactions and a 16.6% increase in median price. Smaller building lots (under two acres) have faced the strongest price pressure, while larger tracts (five acres and up) have moved more slowly and require more capital and time before they can support housing.

The cost stack & power of scale

Materials and labor remain elevated, and experienced crews are scarce. Site work and infrastructure add tens of thousands of dollars per unit. A typical new residential subdivision road runs $500-$600 per linear foot. On a 1,000-foot road (~$550,000), the cost is about $55,000 per home when shared by 10 units — or roughly half that ($27,500) when shared by 20. National studies estimate regulatory and soft costs can represent about 25% of a new home’s final price, often exceeding $100,000.

Oil prices add another layer of pressure. Asphalt is a petroleum byproduct, so higher crude prices directly raise road and driveway costs. Diesel fuel powers excavation equipment, trucks, and material transport; sustained increases can lift overall paving and site-work expenses by 10-20% or more. Petrochemicals also feed plastics used in piping, insulation, and other building products, while higher fuel costs raise freight rates across the supply chain. When oil prices jump, these effects often appear within weeks and compound the other cost increases already in the stack.

A one-off custom home absorbs the full land, driveway, septic, and soft-cost burden. Multi-unit or clustered projects amortize those same costs, improve material and labor pricing through volume, and reduce interest carry through phasing. This is why much new construction has shifted toward attached product, and why large minimum lot sizes raise the price of every unit that is built.

Condos, second homes & year-round need

Density advantages help explain the rise in condos and townhouses. Yet a large share of recent condo development in the Lakes Region and similar markets targets second-home buyers. Statewide seasonal occupancy is roughly 10%; in lake communities it is substantially higher. Units occupied only part of the year reduce effective supply for full-time residents even as they add to total housing stock. The open question is whether more of the density advantage can be captured by households that live here year-round.

Land banking, easements & closing thoughts

Land banking (options or phased take-downs) reduces capital at risk during long entitlements and broadens the buyer pool for landowners. Conservation easements and current-use taxation lower carrying costs and protect open space, but they also remove acreage from the housing pool — especially when applied to land near roads and utilities. Both tools serve real purposes; the balance depends on local priorities.

Large minimum lot sizes force infrastructure costs onto fewer units. Concentrating new housing near existing sewer, water, and roads is usually more cost-effective than extending services long distances. Entitlement delays add interest and opportunity cost before any unit is sold. The constraints are real: land is more expensive and the easiest lots are largely built out. The math improves when land is used more efficiently, infrastructure is shared, and product aligns with year-round demand. New Hampshire has land and demand. Closing the gap depends on allocating costs across more units and allowing those units where they are needed.

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This article was written by Randy Miller, a Realtor at Roche Realty Group in Meredith, and can be reached at 603-279-7046. Visit rocherealty.com to learn more about the Lakes Region and its real estate market.