According to the latest Survey of Construction (SOC), 42 percent of new single-family detached homes sold in 2022 were built on lots under 7,000 square feet, that is 0.16 of an acre. This is the highest share on record and reflects stark changes in the lot size distribution since the Census Bureau started tracking these series over 20 years ago when just 28 percent of new for-sale single-family detached homes were occupying lots of that size.
The fact that a shift in speculatively built (or spec) home building towards smaller lots continued despite the pandemic-triggered suburban flight and presumed shifts in preferences towards more spacious living undoubtedly reflects unprecedented lot shortages confronted by home builders during the pandemic housing boom, as well as their attempts to make new homes more affordable.
Aggregating up and including all lots smaller than one-fifth of an acre brings the share close to 68%. In sharp contrast, less than half (46%) of new single-family detached spec homes were built on lots of that size in 1999, when the Census started tracking these data.
A persistent shift towards smaller lots, however, is a more recent phenomenon. The share of lots under one fifth of an acre was fluctuating around 48%, never crossing the 50% mark, until 2011. It was only during the last decade that the share rose rapidly, from 50% in 2011 to 61% right before the pandemic and gained additional 6 percentage points during the last three years.
A closer look at the lot size distribution since 2011 shows that most dramatic shifts took place at the lowest end, with lots under 0.16 acres increasing their share by 14 percentage points. In 2011, 28% of all sold single family detached homes were sitting on lots under 0.16 acres and additional 22% were occupying lots between 0.16 and 0.25 acres. Fast forward to 2022, these shares increased to 42% and 25%, respectively.
At the other end of the lot size distribution, the share of spec homes built on larger lots exceeding half an acre shrunk from 12% in 2011 to 8% in 2022. The share of lots measuring between a quarter and half an acre declined from 24% to 17% over that time span.
The median lot size of a new single-family detached home sold in 2022 now stands at 8,524 square feet, or just under one-fifth of an acre. This is slightly larger but statistically not different from the lowest on record median of 8,177 square feet set a year before the Covid-19 pandemic.
While nation’s production of spec homes shifts towards smaller lots, the regional differences in lot sizes persist. Looking at single-family detached spec homes started in 2022, the median lot size in New England is 2.5 times larger than the national median.
New England is known for strict local zoning regulations that often require very low densities. Therefore, it is not surprising that single-family detached spec homes started in New England are built on some of the largest lots in the nation, with half of the lots exceeding one-half of an acre. The neighboring Mid Atlantic and more distant East South Central divisions are next on the list with the median lot occupying just under a third of an acre.
In the South, the West South Central division stands out for starting half of single-family detached spec homes on lots under 0.16 acres. This is significantly lower than typical lots in the neighboring East South Central division where half of the lots exceed 0.29 acres.
The Pacific division where densities are high and developed land is scarce has the smallest lots, with half of the lots being under 0.14 acres. The bordering Mountain division also reports typical lots smaller (0.16 acres) than a national median.
The analysis above is limited to single-family detached speculatively built homes. Custom homes built on owner’s land with either the owner or a builder acting as the general contractor do not involve the work of a professional land developer subdividing a property. Therefore, in case of custom homes, lots refer to owner’s land area rather than lots in conventional sense. Nevertheless, the SOC reports lot sizes for custom homes and shows that they tend to have larger lots. The median lot size for custom single-family detached homes started in 2022 exceeds one acre.
For the regional analysis, the median lot size is chosen over average since averages tend to be heavily influenced by extreme outliers. In addition, the Census Bureau often masks extreme lot sizes and values on the public use SOC dataset making it difficult to calculate averages precisely, but medians (as the midpoint of a frequency distribution) remain unaffected by these procedures.
Discover more from Eye On Housing
Subscribe to get the latest posts sent to your email.
7,000 square feet is 1/6th of an acre, not 1/16th.
Thanks for noting the typo. It is now corrected in the text.
The record-high share of smaller lots in this article suggests a shift in housing trends. Builders pursuing projects on smaller lots should consider tailored construction loans that account for potential space limitations and construction challenges while maintaining favorable financing terms.