Eye On Housing
The typical size of newly built single-family homes declined during 2014. Despite the recent cooling, current typical new home size reflects post-recession increases due to an atypical mix of home buyers. As more first-time buyers return to the market, typical home size will continue to post slight quarterly declines.
According to fourth quarter 2014 data from the Census Quarterly Starts and Completions by Purpose and Design and NAHB analysis, median single-family square floor area decreased from 2,414 in the third quarter to 2,385 square feet at the end of 2014. The final quarter estimate marks a noticeable decline from the first quarter median of 2,478. Average square footage for new single-family homes ticked up somewhat during the fourth quarter to 2,625 but is below the first quarter estimate of 2,727.
Annual estimates of both median (2,414) and average (2,624) single-family square footage for 2014 were less than the comparable 2013 measures (2,460 and 2,669 respectively).
On a less volatile one-year moving average, the recent decline away from the post-recession increase is seen on the graph above, although current sizes remain elevated. Since cycle lows and on a one-year moving average basis, the average size of new single-family homes has increased 12% to 2,649 square feet, while the median size has increased almost 16% to 2,438 square feet.
The post-recession increase in single-family home size is consistent with the historical pattern coming out of recessions. Typical home size falls prior to and during a recession as some homebuyers cut back, and then sizes rise as high-end homebuyers, who face fewer credit constraints, return to the housing market in relatively greater proportions. This pattern has been exacerbated in the last two years due to market weakness among first-time homebuyers.
In contrast to single-family patterns, new multifamily apartment size is down compared to the pre-recession period. This is due to the weak condo market.
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