New homes got slightly larger in the third quarter, contrary to the overall trend, which has been for smaller houses since 2013 — off by some 200 feet in the seven-year period.
By Manuel Gutierrez, Consulting Economist to NKBA
After several years of houses shrinking in size, the average size of new single-family homes rose modestly to 2,484 square feet in the third quarter of this year. This is an increase of 19 square feet from last year, compared with an average drop of about 50 square feet in each of the previous four years.
Looking at the larger picture, house size has been declining since 2013, except for a negligible gain of two square feet in 2015. In 2013, the average single-family house was 2,701 square feet, 217 square feet bigger than today.
In contrast to this gain in single-family house size, multifamily housing units shrank by 57 square feet to an average of 1,065 square feet in the third quarter. Also counter to the steady declines in single-family house size, multifamily size has seen ups and downs since 2013.
Historically, decreases in the size of single-family homes have been driven by economic recessions, as can be seen by the gray bars in Fig. 2.
In more recent years, however, the single-family house sizes have fallen even in times of general economic prosperity.
Although growth since 2013 has averaged 2.4%, which is below the historical average of around 3.3%, the size of new single-family homes has run counter to general growth expectations.
New housing units built in multifamily buildings are smaller today by 57 square feet than a year ago (Fig. 1, above).
Despite the declining size of new homes over much of the past decade, it’s too soon to conclude that larger homes are no longer in favor.
Home Sizes Up in Three Regions
New homes built in each of the four regions do not follow the same steady national declining path over the last five years. In fact, in three of the four regions, the size of single-family houses was higher this year than in 2019.
The Northeast and Midwest showed a sharp jump in house size this year. The average new home in the Northeast jumped by 89 square feet, to 2,704 square feet. Houses in the Midwest were 95 square feet larger than in 2019, but they average only 2,394 square feet , smallest in the nation.
New houses in the South are just 14 square feet larger this year, at 2,487 square feet, while the West was the only region posting a drop (32 square feet), to an average of 2,474 square feet.
Despite the 3Q uptick, on a long-term basis, houses in three of the four regions clearly indicate that consumers are buying smaller single-family homes.
A similar pattern is evident for housing units built in multifamily structures. The biggest declines in house size were in the two regions with smallest multifamily units — the Northeast, down 115 square feet this year to an average of 967 square feet, and the Midwest, which dropped 140 square feet to an average of 989 square feet.
The largest multifamily houses were built in the South, with an average of 1,135 square feet, down only 33 square feet from last year.
The average size of multifamily housing units in the West dropped by 42 square feet, to 1,042 square feet.
