Results from NAHB’s What Home Buyers Really Want survey and a combination of Census Bureau/HUD data show that new homes generally do a good job of satisfying the typical buyer’s desire for living space, especially when compared to existing homes on the market.
A simple way to get an idea of how new and existing homes match up with buyer preferences is to look at the share of homes above a particular size threshold. For example, 62 percent of the recent and prospective home buyers in NAHB’s survey want a home that’s at least 2,000 square feet—exactly the same as the share of new single-family homes started in 2011. In comparison, only 42 percent of existing owner homes (either owner-occupied or vacant for sales) are of this size.
A result like this shouldn’t be too surprising. Half of all homes in the U.S. are over 37 years old, and preferences for things like size, amenities, location of particular amenities, and floor plans change over time. Builders who don’t do a good job of responding to current preferences are not likely to stay in business for long, so new homes really should match what current buyers want in most cases. Looking at the size of homes is an easy way to demonstrate this, because it’s one characteristic that’s readily available and quantifiable.
Looking at the distribution in more detail, the size of home most commonly wanted by buyers is in the 2,000 to 2,500 square foot range, which is also the most common size for new single-family homes started. Existing homes, on the other hand, are more likely to be under 1,600—or even under 1,200—square feet, a size relatively few buyers say they want. The full distribution is shown below.
In the table above, size of new homes is based on single-family homes started in the 2011 public use data file from the Survey of Construction. The size of existing homes is based on homes that are classified either as owner-occupied or vacant for sale in the public use data file from the 2011 American Housing Survey. Both of these surveys are funded by the Department of Housing and Urban Development’s Office of Policy Development & Research, and conducted by the U.S. Census Bureau.