New-home sizes shrinking to attract entry-level buyers

December 18, 2014 1 min read

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According to new data released by the Commerce Department on Wednesday, the median size of a single-family home built during Q3 2014 shrank 2.3% to 2,414 square feet from 2,472. The shift to relatively smaller homes means entry-level buyers may finally have options within their price range.

The Wall Street Journal reports:

“Median new-home sizes had been on a general upward swing since 2012 as builders focused on building increasingly larger, more expensive homes to cater to the better-heeled buyers with the income and credit to buy homes. Entry-level buyers, meanwhile, remained largely sidelined by tepid wage growth, mounting student debt and stringent mortgage-qualification standards.

“Now, early signs are emerging that entry-level buyers are coming back. National home builder D.R. Horton Inc. last week posted a 38% gain in sales orders for its fiscal fourth quarter ended Sept. 30, fueled partly by hefty gains from its new Express brand of homes priced at less than $200,000.”

While in the throes of the housing recession, many experts predicted buyers would seek more practical home sizes to avoid financial peril, including foreclosure or a home underwater. It may have taken a while to become reality — and for an entirely different set of reasons — but all signs point to the shrinking American home gaining serious ground in 2015.


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