NAHB data shows the average size of new houses fell for the third straight year in 2018. Median square footage of single-family houses decreased to 2,320 last year after peaking at more than 2,500 square feet in 2015.
Although still above the sub-2,200-square-foot medians hit during the Great Recession, the numbers suggest that entry-level buyers and those looking for starter homes might finally have more options in the coming years. It’s also good news for those who have had problems getting a mortgage because of credit issues.
Robert Dietz, NAHB’s chief economist, said the data probably indicates that home builders are turning toward middle-class housing after spending much of the current economic growth period focused on the high-end development.
In the aftermath of the housing bubble and the economic crisis, builders focused on higher-end buyers. With money to be made there and the limited ability of those with fewer resources to purchase new homes, bigger homes were the primary focus.
So what has changed? Lower class and middle class buyers may now again have the resources to purchase new homes. With a steady economic recovery (stock market up, unemployment down, wages relatively flat), homeownership may be attainable again for more people. The homeownership rate has been down during the last decade though up a little recently.
Just one reminder: the decreased median may not mean that fewer large homes are under construction – Americans do seem to want big homes – but rather that more smaller new homes were built.