New Homes Are Getting Smaller

Developers are continuing to shrink the size of new single-family homes, according third-quarter housing data compiled by the National Association of Home Builders. The median square footage of a single-family home was 2,378 square feet in the third quarter.

In the years following the Great Recession, builders were focused on the higher end of the market, catering to larger-sized homes. But more recently, builders have renewed their focus on the entry-level market, and NAHB predicts square footage of new homes to continue to decrease.

“Typical new-home size falls prior to and during a recession, as home buyers tighten budgets, and then sizes rise as high-end home buyers, who face fewer credit constraints, return to the housing market in relatively greater proportions,” NAHB explains at its Eye on Housing blog. “This pattern was exacerbated during the current business cycle due to the market weakness among first-time home buyers. But the recent declines in size indicate that this part of the cycle has ended, and the size will trend lower as builders add more entry-level homes into inventory.”

Source: “Declining New Home Size Trend Continues,” National Association of Home Builders’ Eye on Housing blog (Nov. 17, 2017)

More Than Half of Home Listings Are ‘Affordable’

Fifty-four percent of for-sale listings of existing homes are within reach for a median-income household in the U.S., according to a new analysis by realtor.com®. Their analysts used the national median income of $51,801 to determine how many of the site’s 1.6 million listings would be affordable to an average family, while also assuming a 20 percent down payment and 30-year fixed-rate mortgage. The monthly payment could not exceed 28 percent of the family’s income.

“So far this year we are hearing from home shoppers that finding a home that meets their needs or budget is the biggest impediment to buying,” says economist Jonathan Smoke, at realtor.com®. “The good news from this data is that more than half of the listings nationwide are by definition affordable. If affordability is a challenge, this tight market favors activity in the heartland, where markets have a high number of affordable homes.”

Realtor.com® analysts also found that existing homes tended to be much more affordable than new homes. In February, realtor.com® had more than 7,700 actively selling new-home communities listed, with an inventory of nearly 57,000 homes available for sale. Only 21 percent of those new homes, however, were deemed affordable.

Source: “Where America’s Affordable Homes Are – and Aren’t – in 2015,” realtor.com® (March 19, 2015)