Homeowners discovered a need for more residential space throughout the COVID-19 pandemic as work-from-home became more prevalent and quarantines extended into lengthier lockdown periods. Now, however, as housing affordability continues to deteriorate, that trend is reversing, according to the National Association of Home Builders’ Eye on Housing.
Median single-family square floor area fell to 2,203 square feet during the fourth quarter of 2022, the lowest level since 2011, while average (mean) square footage for new single-family homes dropped to 2,472 at the close of 2022.
Home size rose from 2009 to 2015 as entry-level new construction was constrained. Home size declined between 2016 and 2020 as more starter homes were developed. Going forward we expect home size to face opposing determinants. A shift in consumer preferences for more space due to the increased use and roles of homes (for work among other purposes) will increase the demand for space, while tighter budgets due to elevated interest rates will reduce demand. The tighter budget factor is likely to dominate in coming quarters.
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