In recent years, American homebuyers bought into the “bigger is better” philosophy. But now, for the first time since the recession, the average size of a single-family home in the U.S. is getting smaller.
According to Census Bureau data and an analysis from the National Association of Home Builders, the average square footage for a single-family home dropped by 42 feet — from 2,658 square feet in the first quarter of 2016 to 2,616 square feet in the second quarter.
“That may not sound like a lot, but it is a clear reversal in the trend of builders focusing on the higher-end buyer,” says CNBC.
The NAHB says it’s normal to experience a jump in house size after a recession, when “high-end homebuyers” with good credit flood the real estate market. However, the super-sized housing trend was more pronounced in the U.S. following the Great Recession.
NAHB chief economist Robert Dietz writes:
“This pattern was exacerbated during the current business cycle due to market weakness among first-time homebuyers. But the recent small declines in size indicate that this part of the cycle has ended and size should trend lower as builders add more entry-level homes into inventory.”
According to CNBC, new home sales increased by 12 percent between June and July, with the biggest share of the increase going to homes priced in the lower and middle ranges.
Bob Youngentob, president of Maryland-based builder EYA, tells CNBC:
“The majority of it is a question of affordability. People want to stay in closer-in locations, at least from our experience, and closer-in locations tend to be more expensive from a land and development standpoint and so, the desire to be able to keep people in those locations is translating into smaller square footages and more efficient designs.”
CNBC says financing options and millennials’ preference for “smaller, simpler” housing have also likely had an impact on the housing market.
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