Unit size on new residential construction is on the rise as more home buyers desire extra space. But it's also coming with a much steeper price tag.
The average size of a new home rose to about 2,720 square feet in 2015, up from 2,660 square feet in 2014, the National Association of Home Builders reports. Nearly half of the homes constructed last year had four or more bedrooms. A quarter of homes also had garages that would hold three or more vehicles.In 2015, the average price of a new-home rose to $351,000 – up $100,000 from 2009, NAHB reports.
Some of the increase is due to builders catering more to the luxury market and moving away from building homes for first-time buyers. “They haven’t made more starter homes in recent years mainly because of land prices, construction costs, and lack of available mortgages for less-affluent buyers,” The Wall Street Journal reports. First-time home buyers tend to bring the average size of new homes down since they tend to live in smaller homes than move-up buyers.
The average new-home size was 2,360 square feet during the 2008 financial crisis. It then started climbing sharply, leveling out in 2014, and now back on the rise again in 2015.
“Last year I was expecting, and I wasn’t alone, that the average size of homes would actually fall … because there were new measures that were supposed to bring in a wave of first-time home buyers,” says Rose Quint, assistant vice president of survey research at NAHB. “That didn’t happen.”
Source: “Home Sizes Expand, Along With Prices,” The Wall Street Journal (Jan. 24, 2016)