Home Construction Trending Toward Fewer, but Larger, Homes

Published On
Dec 6, 2021

As has been reported in recent months, while the housing market experienced a major “boom” for a good part of 2021, other segments of the construction market struggled, and home construction starts have tailed off in the last couple of months. This, of course, is not the best news for electrical contractors involved in new home construction.

However, there is an upside that has been less noticeable, but is just as relevant. While the total number of new homes being built has been decreasing a bit, the size of those new homes, as well as the size of existing homes (as the result of expansions) has been increasing. This is good news for contractors.

According to a December 2021 report from the National Association of Home Builders (NAHB), based on the latest U.S. Census data, COVID-19 has impacted the way that many residents are using, and plan to use, their homes. Specifically, there is an increased desire for space to accommodate added functions such as working or studying from home. Furthermore, there is evidence that this desire for larger existing and new homes is continuing to increase.

NAHB reported that, according to data from the third quarter of 2021 from the “Census Quarterly Starts and Completions by Purpose and Design,” supplemented by NAHB analysis:

  • Median single-family square floor area (for new and existing homes combined) increased to 2,337 square feet, which represents an increase of 9.3% since the Great Recession lows.
  • Average square footage for new single-family homes increased to 2,541, representing an increase of 6.2%.

“This marks a shift from the previous downward trend in home size from 2016 to 2020, during which time more starter homes were developed,” according to the NAHB.

Robert Dietz, chief economist for NAHB, provided an additional perspective: “An expected impact of the virus crisis is a need for more residential space, as people use homes for more purposes including work. Recent data confirms this impact on the market continues to occur.”

Dietz added that home size rose from 2009 to 2015, as entry-level new construction was constrained. Subsequently, home size declined between 2016 and 2020, as more starter homes were developed.

“Going forward, we expect home size to increase again, given a shift in consumer preferences for more space due to the increased use and roles of homes (for work, for study) in the post-COVID-19 environment,” he said.

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