The size of new single-family homes decreased slightly in the third quarter of 2017 from the previous quarter, further proof that a new trend toward smaller homes is continuing to take shape, according to the National Association of Home Builders (NAHB).
The NAHB referred to data released by the U.S. Census Bureau that showed the average floor area of new single-family homes started in Q3 was 2,581 square foot, as compared to 2,618 in Q2 and 2,628 in Q1. But it looks like, based on the data that goes back to Q1 2014, the average size of new single-family homes has been slowly declining, with a few ups and downs here and there, since at least the beginning of 2014, when the average was 2,727 square feet.

What’s Driving the Trend?

The NAHB reported that it expects the typical size of new single-family homes to continue to decrease as more builders try to meet the housing demand for more affordable starter homes, especially from first-time homebuyers.
According to the NAHB, home size increases are common immediately following a recession. The smaller home sizes, on the other hand, signal “a reversal of the trend that had been in place as builders focused on the higher end of the market during the recovery.”
Trulia’s chief economist Ralph McLaughlin was quoted recently in a Bloomberg article, saying that developers may also be finally starting to take advantage of the increased demand from homebuyers who want homes that are in the lower to middle price range. Although, he added, “It’s going to take a lot of new construction to see appreciable changes in the starter market.”

Why Do Homes Get Bigger Post-Recession?

Historical data seems to indicate that the typical home size goes down during recessions as many homebuyers have budget constraints. However, as the recovery starts, wealthier buyers tend to return to the market in greater numbers than others, as they aren’t limited by budget and credit issues.

Home Sizes Also Vary by Region

While the average size of single-family homes in the U.S. is decreasing, it’s worth noting that there is quite a range in this average by region. The average size of new homes started in the Northeast in Q3 2017, for example, was well above the national average, at 2,805 square feet, while the South was also above the national average at 2,641 square feet.
The average floor area of single-family homes in the West for Q3 was slightly below the national average at 2,531 square feet, while the Midwest region had the smallest average new home size for the quarter at 2,436 square feet.

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