New single-family home size has trended lower over the last four years as builders sought to add additional entry-level supply to an inventory-starved housing market. However, the coronavirus and the recession of 2020 potentially reset those trends, as evidence grows that households will seek more space for home offices, home gyms, and other purposes.
According to first quarter 2020 data from the Census Quarterly Starts and Completions by Purpose and Design and NAHB analysis, median single-family square floor area ticked up to 2,291 square feet. Average (mean) square footage for new single-family homes was effectively unchanged at 2,506 square feet.
On a less volatile one-year moving average, the recent trend of declines in new home size can be seen on the graph above. Since cycle lows (and on a one-year moving average basis), the average size of new single-family homes is now less than 5% higher at 2,487 square feet, while the median size is less than 8% higher at 2,266 square feet.
The post-recession increase in single-family home size was consistent with the historical pattern coming out of recessions. Typical new home size falls prior to and during a recession as home buyers tighten budgets, and then sizes rise as high-end homebuyers, who face fewer credit constraints, return to the housing market in relatively greater proportions. This pattern was exacerbated during the current business cycle due to market weakness among first-time homebuyers and supply-side constraints in the building market.
In contrast to single-family patterns, new multifamily apartment size is down compared to the pre-recession period. This is due to the weak for-sale multifamily market and strength for rental demand.
Given the importance of housing during the virus crisis, we are forecasting gains in home size in the quarters ahead.