No, this is not a spoof – it’s an actual news story.   There are many people in Iceland who take their belief in Elves very seriously.
Very seriously.

The Nordic island’s “Huldufolk” or “hidden folk” affect construction plans so regularly that the road and coastal administration has come up with a stock media response for elf inquiries.
It reads: “Issues have been settled by delaying the construction project at a certain point while the elves living there have supposedly moved on.”

“Road Project in Iceland delayed to protect hidden elves”
You can read about the whole controversy here:
https://tinyurl.com/IcelandHiddenElves
Families who believe in elves as spirits of the earth will sometimes build elf homes in their backyards, to deter the elves from wanting to enter their homes and cause mischief.
https://tinyurl.com/o75kf2r
And you thought the whole “Elf on a Shelf” meme was drama!