Smaller Houses

 Newly built houses are getting smaller and smaller. Single family houses started in the third quarter of this year were 2,430 square feet, average size. This is 82 sq. ft. smaller than a year ago. For multifamily units the average size also fell, to 1,032 square feet which is 55 sq. ft. less than the same quarter last year. This is according to the latest housing starts data release from the U.S. Census Bureau.

The decline in house size, on top of the drop in the number of houses started this year, implies smaller demand for construction products going into residential sector. Year to date through October 153 thousand fewer houses were started than in the same period last year. Fewer houses combined with the reduction in house size translates into a loss of 10.9 million square feet of floor space so far this year (approximately). 7.7 million is from single family houses and 3.2 million in multifamily housing units. 

House size has been falling for at least ten years in both single and multi family houses. Single family houses were largest in 2013, when their average size was 2,701 square feet, 271 square feet or 10% larger than today. 

The median size of houses has also fallen during the same period. The median for single family houses was 2,221 sq. ft. in the third quarter, also 10% less than its peak size of 2,491 sq. ft. in 2013.

The decline in the size of multifamily housing units has been falling longer. Peak size was reached back in 2007 when the average multi unit measured 1,342 square feet. That is, multifamily units were 310 sq. ft. bigger that year.

One reason explaining larger multifamily houses around 2007 is that a greater number of units were built to be sold as condominium houses. Condominium multifamily units are typically larger than rental units. For instance, in 2007 four in ten of the units (40%) were destined as condominiums- 60% were built for rent. In contrast, virtually all the units built last year (97%) were rentals. 

Regionally, we find that the Northeast has the biggest new single family homes. The average size in this region in the third quarter of this year was 2,562 square feet, although it declined by 6.9% or 189 sq. ft. from last year. This year's sharp drop brings the average size in this region closer to what it was in 2018.

The average size in the other three regions also fell, although by smaller percentages than in the Northeast Their average size also has declined over the last ten years. 

The second largest reduction in size was in the South region, with a 4% drop to 2.473 sq. ft. in the third quarter. The South region also boasts the second largest new single family houses.

The West region's single family houses are the third biggest of all four regions, with an average of 2,395 sq. ft. Also they had the smallest drop in size last year, new houses are just 1.2% smaller than a year ago.

The smallest single family houses are built in the Midwest region, with an average of 2,237 sq. ft. this year. The size of new homes in this region has also been declining for a decade now, ending with a 2.4% drop last year.

Similar to the regional trend in the size of single family houses, we find that multifamily housing units in all four regions have become smaller for more than a decade now. Further, with the exception of the Midwest region where houses this year are actually larger than a year ago, the size of multifamily houses fell last year in the other three regions.

The size of multifamily houses in the Northeast region saw the biggest drop this year, with a 10% decline bringing the average size to just 853 square feet. The South and Midwest regions had similar declines, of 8.1% and 8.2% each, respectively. The average unit size is also very similar with units in the South region measuring 1091 sq. ft. on average. This is slightly higher than the 1,056 square feet in the Midwest region. 

Housing units in the West region measure currently 995 sq. ft. on average, just 5.3% smaller than a year ago.