New home sales beef up as average size pares down
Posted August 25, 2016 11:12 a.m. EDT
Sales of newly built homes jumped to their highest level in nearly nine years in July, reaching heights not seen since before the Great Recession. Prices also dipped a bit, finally.
That may have less to do with builders lowering prices and more to do with buyers opting for smaller homes, which are popping up across the country.
In Brandywine, Maryland, Mid-Atlantic Builders says the desire for cheaper prices is driving the dip in home sizes.
"It depends on the market, but in our market it's been financing that is driving the deals, and builders are adjusting their product to meet the affordability issue," Stephen Paul, with Mid-Atlantic Builders, said.
More entry level buyers who need mortgages are coming back to the housing market, and that means more demand for smaller homes.
"At one point before the Great Recession, we were probably averaging 4,200-square feet of house. Now, we're 2,800 to 3,100-square-feet," Paul said. "So, they've shrunk quite a bit."
The average size of a new home built from April to June was more than 70-square feet smaller than it was during the first three months of 2016.
Doug Yearley, the CEO of Toll Brothers, says there are a number of factors contributing to the size decline.
"There is a mix issue, where more and more baby boomers buy houses, they may be smaller because they don't need all the square footage," Yearly said.
For Millennial home buyers, small can often translate into "tiny." From micro apartments to tiny homes, Millennials are being drawn to tricked-out living spaces filled with tech-friendly amenities.