New single-family home size trended lower during the third quarter of 2019 as interest rates remained low.
According to third quarter 2019 data from the Census Quarterly Starts and Completions by Purpose and Design and NAHB analysis, median single-family square floor area ticked up to 2,264 square feet. Average (mean) square footage for new single-family homes declined to 2,464 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 just 6% higher at 2,521 square feet, while the median size is 9% higher at 2,296 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. But declines in size over recent years indicate that this part of the cycle has ended, and size will trend lower as builders add more entry-level homes into inventory and the custom market levels off.
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.