Dive Brief:
-
New home sizes are shrinking, the Commerce Department reported Wednesday.
-
The median size of a single-family home built in the third quarter was 2,414 square feet, compared with 2,472 square feet in the second quarter. That accounts for 2.3% less space and is the second consecutive quarterly decline in home size.
-
Until 2012, home sizes were growing as more builders targeted wealthier buyers who could satisfy lenders’ stringent credit requirements, and hefty down payments. Smaller homes traditionally have been built for entry-level buyers, who are entering the market in smaller numbers since mortgages became more difficult to qualify for.
Dive Insight:
Shrinking home sizes could indicate that builders are preparing for more demand from younger, first-time homebuyers. An early indicator of the turning tide: Big builder DR Horton, which specializes in entry-level homes, posted a 38% gain in sales orders for the three months that ended Sept. 30. The company said a new line of homes priced at less than $200,000 helped fuel sales.