Why Are New Homes Getting So Big? Look At Who’s Buying Them

Preliminary data provided to NAHB by the Census Bureau on the characteristics of homes started in 2013 show the trend toward larger homes continued unabated last year, as did the share of new homes with 4+ bedrooms, 3+ full baths, 2-stories, or 3-car garages.  The average size of new homes started in 2013[1] was 2,679 square feet, about 150 square feet larger than in 2012 and the fourth consecutive annual increase since bottoming out at 2,362 square feet in 2009.

fig1New homes started in 2013 were also more likely to have additional features: nearly half, 48%, had 4 or more bedrooms; 35% had 3 or more full bathrooms; 22% had a garage for at least 3 cars; and 60% were 2-stories.  The share of new homes started with these features has been increasing consistently for 3 or 4 years, and the most obvious question is “why?” Why are homes getting this BIG?

fig2To get an answer, just take a look at WHO is buying new homes?  The typical new home buyer in recent years has been someone with strong credit scores and high levels of income.  To the first point, the graph below shows how the average credit rating of all US consumers has remained rather flat over the last few years (blue line), while the average credit rating of mortgage borrowers (red line) took a dramatic jump after 2007.  By 2013, the gap between the two measures was 58 points, compared to 33 points in the early 2000s.

fig3

To the second point, the graph below shows the rising trend in new home buyers’ income in recent years.  In 2005, the median income of new home buyers was $91,768.  By 2011, it had increased by more than 17% to $107,607.  It is not too surprising, therefore, to see home size and features continuing to trend upward, given that those buying new homes are precisely the kind of buyers who generally purchase large, feature-loaded homes.

fig4


[1] Preliminary data cover first half of the year.



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22 replies

  1. Looks to me that this is confirmation that our country’s current housing policy insures that only the wealthiest Americans with plenty of cash and impeccable credit are able to buy new homes. Unfortunately for our industry, the supply of such people is not inexhaustible. While this may seem to be good news at first blush, it is quite the opposite.

  2. Do you have this data broken down by region? Would be interesting to see where the higher size numbers are coming from across the US.

  3. Nice report—will there be one for 2015?

  4. Homes are getting big because people today can afford to pay more for a home with more space and features.People who really care about lifestyle always want to own big homes

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