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Homes are Shrinking Again

New single family homes are starting have been shrinking, according to the National Association of Homebuilders (NAHB).

According to Q1 2017 data from the Census Quarterly Starts and Completions by Purpose and Design and NAHB analysis, median single-family square floor area was slightly lower at 2,389 square feet. Average (mean) square footage for new single-family homes declined to 2,628 square feet.

According to the data, home sizes reached a plateau in 2015 and 2016 after experiencing a steady rise post-recession, but have started to drop off since. The current average home size is 2,624 square feet, 10 percent higher than the cycle low. The median size is 14 percent higher, at 2,402 square feet.

NAHB

NAHB

The post-recession increase in single-family home size is consistent with the historical pattern coming out of recessions. Typical new home size falls prior to and during a recession as home buyers tighten budgets, and then sizes rise as high-end homebuyers, who face fewer credit constraints, return to the housing market in relatively greater proportions.

This pattern was exacerbated during the current business cycle due to market weakness among first-time homebuyers. But the recent declines in size indicate that this part of the cycle has ended and size will trend lower as builders add more entry-level homes into inventory.

Meanwhile, while single-family is up post-recession, new multifamily apartment size is down compared to the pre-recession period. According to the NAHB, this is due to the weak for-sale multifamily market and strength for rental demand

About Author: Seth Welborn

Profile photo of Seth Welborn
Seth Welborn is a contributing writer for DS News. He is a Harding University graduate with a degree in English and a minor in writing, and has studied abroad in Athens, Greece. An East Texas native, he also works part-time as a photographer.

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