Entry-level home construction might finally be on the rise Since the housing collapse 10 years ago, home builders have been largely focused on serving the high end of the market, building larger homes for deep-pocketed buyers who are more likely to qualify for a mortgage, if they need to get a mortgage at all.
The lack of entry-level construction has often been cited as one of the causes of the current housing affordability crisis, but recent construction data from the U.S. Census suggests that things may be changing.
According to analysis by the National Association of Home Builders, the average and median home sizes have been steadily falling for the last few years, indicating that builders are turning their focus to more entry-level home production.
In the third quarter of 2018, the one-year moving average of new single-family home sizes fell to 2,564.5 square feet, while the one-year moving median fell to 2,369.75 square feet. Both numbers peaked in the second quarter of 2015 and have been steadily falling ever since.
But these numbers may say more about who is buying houses than individual home size preferences. In the aftermath of the housing collapse in 2008, many homeowners lost their homes, their jobs, and had their credit wrecked in the process. With the economy in tatters, the only reliable homebuyers were the wealthy.
Homebuilders responded in kind by producing housing for this demographic, and it shows in the home size data. By the summer of 2011, the...