The trend of increasing sizes for new single-family homes brought about by the COVID-19 appears to be reversing, as the median single-family square floor area for homes started in the third quarter declined, according to an analysis by the NAHB.
According to third quarter 2022 data from the Census Quarterly Starts and Completions by Purpose and Design and NAHB analysis, median single-family square floor area declined to 2,276 square feet. Average (mean) square footage for new single-family homes ticked up to 2,506.
Since Great Recession lows (and on a one-year moving average basis), the average size of new single-family homes is now 5.6% higher, while the median size is 9.7% higher. However both measures will weaken in the coming months.
Home size rose from 2009 to 2015 as entry-level new construction was constrained. Home size declined between 2016 and 2020 as more starter homes were developed. Going forward we expect home size to face opposing determinants. A shift in consumer preferences for more space due to the increased use and roles of homes (for work among other purposes) will increase the demand for space, while tighter budgets due to elevated interest rates will reduce demand. The tighter budget factor is likely to dominate in coming quarters.
