Will New Homes Keep Getting Bigger?

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For the past two years, the size of newly-built single-family homes has been rising. In fact, the most recent data from the Commerce Department shows the median size of homes that began construction during the second quarter of this year was 2,478 square feet. That is just shy of the all-time high of 2,491 square feet, set last fall. This trend, however, may be coming to an end. Homebuilders have reported an increase in entry-level and first-time buyers entering the market, which may help level off the square footage of new homes being built. The increases – largely driven by luxury and move-up buyers, who dominated the market during the early part of the recovery – should begin to slow as prospective buyers looking for their first home search for smaller, more modestly priced houses. With more diversity among buyers, the trend toward larger homes with bigger garages, basements, and bedrooms should begin to reverse and reflect the reemergence of entry-level buyers who, mostly likely, will be searching for a home that better fits their needs and budget. More here.

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