New homes are trending smaller.
According to the National Association of Home Builders, single-family homes built in the third quarter of 2017 are smaller than previous recent quarters. The association predicts that the industry is trying to add more entry-level homes to the market in a time when inventory is scarce.
The report found, thanks to the Census Quarterly Starts and Completions by Purpose, that the median single-family square foot area was 2,378 square feet, while the average or mean square footage for newly built single-family homes decreased to 2,518 square feet.
While newly built home sizes in 2017 were below a peak set in 2015, they are still not as small as the average home in 1999. NAHB found that the average size of a new single-family home is 10 percent higher at 2,620 square feet, while the median size is 14 percent higher at 2,399 square feet.
“The post-recession increase in single-family home size is consistent with the historical pattern coming out of recessions,” said NAHB’s Robert Dietz. “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.”