How Millennials Are Affecting the Size of New Homes

January 15, 2020
Home Sizes
Planning to buy property. concept of Choose the best. By Looker_Studio - Adobe Stock

In every region but the West North Central, homes with four or more bedrooms are on the decline. The shrinking of new homes reveals a shift in buyer demographics:  Millennials are beginning to buy homes. Because they are just now jumping into homeownership, this new generation of homebuyers will be in the market for smaller starter-homes, contributing to the decline of four-bedroom homes. The three bedrooms option is still the most popular, but interest in builds with two bedrooms or less⁠—while still only 11 percent of the new homes market⁠—is the highest it has been since 2015. 

The U.S. Census Bureau’s Survey of Construction’s (SOC) estimate of the number of bedrooms in new single-family homes has shown a declining trend for homes with 4 bedrooms or more since 2015. The most recent SOC data show the number of bedrooms of new homes whose construction began in 2018 (new homes started).

Nationally, the number of single-family homes started with 4 bedrooms or more declined from 44.8% in 2017 to 43.5% in 2018. These developments are linked to changes in preferences among home buyers. With more Millennials becoming prepared to buy their first home, the starter home share will rise, which means smaller homes and slightly fewer bedrooms.

Historically, new homes started with 3 or 4 bedrooms have held the highest shares and new homes started with 2 bedrooms or less or 5 bedrooms or more have held the lowest shares. The declining trend mirrors the downward trend of new single-family home size.

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