U.S. Home Size Levels Off, for Now at Least
Highlights:
The two-year trend of big, new houses getting even bigger appears to have peaked—at least for now—as more buyers seeking modest homes enter the market.
The median size of U.S. homes on which builders started construction in the second quarter registered 2,478 square feet, unchanged from the first quarter but still close to the all-time high of 2,491 set in last year's third quarter, according to Commerce Department data released Tuesday.
Entry-level and first-time buyers, who tend to buy smaller homes, have largely remained sidelined due to strict mortgage-qualification standards and tepid wage and job growth.
Economists and builders don't predict that median new-home sizes will drop sharply. That's mainly because the return of entry-level buyers is expected to be gradual as move-up buyers continue to account for the majority of sales in the next year or two.
Factors driving the rise in median sizes since 2012, in addition to move-up buyers' greater financial clout, include buyer preferences for more rooms, bigger garages, basements and wide-open living spaces like great rooms. A 2012 survey by the builders group of new-home buyers found that 47% of respondents wanted three bedrooms, 66% wanted a basement, 53% wanted a two-car garage and 19% wanted a three-car garage.
The median size of new homes in the Northeast declined by 6.3% from the first quarter to 2,374 square feet in the second.
The Midwest declined by 13.6% to 2,354. The South increased by 1.4% to 2,502. The West increased by 1.9% to 2,477.
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