The long-term trend in the United States has been toward larger new homes. But, early 2023 data shows slightly smaller new homes:

The average square footage of a new home stood at 2,469 square feet in the first quarter of 2023, almost in line with the fourth quarter of 2022, but down 2.2% from the previous six quarters when the square footage averaged 2,525 square feet, according to data from the Census Quarterly Starts and Completions by Purpose and Design and NAHB analysis. That’s a difference of 56 square feet or about the size of a generously proportioned full bathroom.

This is not a large decline. As the paragraph above notes, the average new house is smaller by roughly the size of a full bathroom. But, here is what might be more important about this number:

-Does this imply the price of a new home is also lower? Several homebuilders are mentioned in this story and the need for cheaper homes is discussed but there are no prices mentioned. Presumably a slightly smaller new home is a cheaper home.

-Where does this 56 square feet tend to come from? Slightly smaller first floor/gathering rooms (great room, kitchen, family room, etc.)? Slightly smaller closets?

-Have we passed peak square footage in the United States? There will always be a market for large new homes but if the average is down a bit for multiple quarters, does this mean it will go down slowly for years?