An expected impact of the virus crisis was a need for more residential space, as people use homes for more purposes including work. Home size correspondingly increased in 2021 as interest rates reached historic lows. However, as interest rates increased in 2022 and 2023, and housing affordability worsened, the demand for home size has trended lower.
According to fourth quarter 2023 data from the Census Quarterly Starts and Completions by Purpose and Design and NAHB analysis, median single-family square floor area came in at 2,156 square feet, the lowest reading since the beginning of 2010. Average (mean) square footage for new single-family homes registered at 2,374 square feet.
Since Great Recession lows (and on a one-year moving average basis), the average size of a new single-family home is now just 1.4% higher at 2,419 square feet, while the median size is just under 5% higher at 2,201 square feet.
Home size rose from 2009 to 2015 as entry-level new construction lost market share. Home size declined between 2016 and 2020 as more starter homes were developed. After a brief increase during the post-covid building boom, home size is trending lower and will likely continue to do so as housing affordability remains constrained.
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Interesting read! The trend towards smaller single-family home sizes reflects a shift towards more efficient and affordable housing solutions. This shift could also impact construction loans, as lenders may need to adjust their financing models to accommodate the changing needs of homebuyers seeking smaller, more affordable homes.