Yahoo Finance Shrinking Dreams? New Homes Hitting The Market At Smallest Size In 15 Years
Homes hitting the market today are noticeably cozier than those from a decade ago. Whether this trend is a plus or a minus depends on what you envision for your future home.
According to the U.S. Census Bureau, the median size of a newly built single-family home in the first quarter of 2024 was 2,140 square feet. This is a reduction from the 2,256 square feet seen in the same period of 2023.
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An analysis from the National Association of Home Builders (NAHB) reveals that new homes are now the smallest they have been since the latter half of 2009.
According to the NAHB, the average home size peaked in 2015 at 2,689 square feet but has been shrinking since. It briefly increased in 2021 when pandemic lockdowns forced people to work remotely, and home offices were in demand.
"Buyers are shaped by the environment when they're in a low-inventory, low-housing-affordability environment," NAHB Chief Economist Robert Dietz told CNBC. "They make certain compromises."
According to the NAHB's 2024 What Home Buyers Really Want study, the typical buyer wants a 2,067-square-foot home. Smaller homes keep building costs down, but 30% of homebuyers are single and don't want larger spaces.
"They may not need 2,000 square feet or even want that for themselves," National Association of Realtors (NAR) Jessica Lautz told CNBC.
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According to NAR's 2024 Home Buyers and Sellers Generational Trends Report, around 28% of surveyed buyers recently bought homes between 1,501 and 2,000 square feet. Meanwhile, 26% purchased homes ranging from 2,001 to 2,500 square feet, and another 16% bought 1,500 square feet or smaller.
About 38% of builders said they built smaller homes in 2023, and 26% said they plan to construct even smaller houses this year, according to the NAHB.
"Homeownership remains a goal for families who are eager to put down roots and have a place to call their own," said NAHB Chairman Carl Harris, a custom homebuilder from Wichita, Kansas. "Our nation's builders are meeting the moment by finding solutions in home construction to allow for more individuals to purchase a home."
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