A size squeeze is coming for single-family homes

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February 17, 2017

Much of the new construction housing demand during the early stages of the economic recovery derived from upscale, move-up buyers who bought bigger homes. But as the market for entry-level detached houses and townhomes expands, the size of new homes is expected to shrink, according to the NAHB’s analysis of fourth quarter date from the U.S. Bureau of the Census.

The average for the size of new single-family homes was 2.6 percent bigger at 2,661 square feet while the median size grew 2.5 percent to 2,453 square feet compared with the third quarter. However, the less volatile one-year moving averages for both figures are slightly less and reflects a recent trend of declines. That decrease, writes NAHB’s Chief Economist Robert Dietz, indicates that the part of the cycle driven by high-end buyers who want bigger houses has ended and house size should decline as more builders add entry-level homes into inventory

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