The National Association of Home Builders reported that new single-family homes sizes were smaller during Q3 2019. The average footage for new single-family homes fell to 2,464 square feet.
Average home sizes have been in decline since 2015 when the average square-footage was above 2,700-square-feet.
The NAHB adds the post-recession increase in single-family home size was consistent with the historical pattern coming out of recessions.
“Typical new home size falls prior to and during a recession as home buyers tighten budgets, and then sizes rise as high-end homebuyers, who face fewer credit constraints, return to the housing market in relatively greater proportions,” the report states.
Home sizes could trend lower in the coming years as the NAHB states homes will get smaller as builders add more entry-level homes into the housing market.
A report by Zillow reveals the housing inventory could see a large boost as nearly homes owned by seniors aged 60 or above will soon become available. The report estimated that 920,000 homes will be available annually from 2017 to 2027 and 1.7 million homes will be available annually from 2027 to 2037.
The Boomer generation once stood at 76 million and today, a third of America’s homes are owned by those 60-years-old and older. Nearly 20 million homes could become available in the next 20 years.
The report states that retirement hubs like Florida and Arizona are expected to feel the most significant impact.
“If demand erodes because fewer people choose to retire there in the coming years, those areas might end up with excess housing,” the report states.
The Census Bureau reported earlier this month that single-family housing starts rose 2% in October to 936,000, and housing completions were 10.3% higher from September’s 1.13 million.
“Construction activity reflected elevated home builder sentiment, which reached a 20-month high in October,” said realtor.com’s Senior Economist, George Ratiu.
First American Financial Corporation Chief Economist Mark Fleming noted low mortgage rates, rising household income, and a surge of millennials had boosted the demand for housing. Fleming, though, said inventory would continue to be an issue.
“However, we have underbuilt new housing relative to demand for years. Building will have to exceed household formation for a number of years to reduce the housing stock ‘debt’ we have accumulated,” Fleming said.