BY BRAD BECKETT ON JUNE 11, 2018
Reversing a trend over the past couple years, the sizes of new single-family homes have been increasing since the start of 2018. The NAHB’s Eye on Housing recently dug into data from the U.S. Census Bureau to show that the median single-family square floor area increased to 2,436 square feet and the average (mean) square footage increased to 2,641 square feet. It’s also been reported Americans are physically getting larger/fatter…..coincidence???
Counter to the recent prevailing trend, new single-family home size increased at start of 2018. New home size had been falling over the last two years due to an incremental move to additional entry-level home construction.
According to first quarter 2018 data from the Census Quarterly Starts and Completions by Purpose and Design and NAHB analysis, median single-family square floor area increased to 2,436 square feet. Average (mean) square footage for new single-family homes increased to 2,641 square feet.
On a less volatile one-year moving average, the recent trend of declines in new home size can be see on the graph above, although current readings remain elevated. Since cycle lows (and on a one-year moving average basis), the average size of new single-family homes is 10% higher at 2,602 square feet, while the median size is 14% higher at 2,392 square feet.
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 and supply-side constraints in the building market. 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.
The data for the first quarter of the year runs counter to this trend, but our forecasts suggest it should reverse as more entry-level housing is constructed.
In contrast to single-family patterns, new multifamily apartment size is down compared to the pre-recession period. This is due to the weak for-sale multifamily market and strength for rental demand.