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The average size of a new house rose to 2,720 square feet last year, an increase of about 2% from a year earlier, and higher prices are making it more difficult for first-time buyers to afford a new home.
Citing figures released by the National Association of Homebuilders, The Wall Street Journal said that the industry seems tilted toward high-end buyers these days. The number of starter homes hasn’t gone up significantly because of rising land and construction costs and because of a shortage of mortgages available to the less affluent.
The average price for a new house last year was $351,000, an increase of $100,000 since 2009. Almost half the houses started last year had four bedrooms, and a quarter of them had garage space for three or more vehicles.
The increase in square footage surprised Rose Quint, assistant vice president of survey research at NAHB. She and others had expected that more first-time buyers would be lured back into the market, a trend that would help keep house size down.
“Last year I was expecting, and I wasn’t alone, that the average size of homes would actually fall … because there were new measures that were supposed to bring in a wave of first-time home buyers,” she told the Wall Street Journal. “That didn’t happen.”
First-time buyers represented about one-third of all homebuyers, off slightly from the year before, and at the lowest level in 30 years.
In a news release, NAHB said it expects that younger buyers will make a significant impact on home design in the future, pushing the market toward energy efficiency and smart home technology. But first they have to start buying houses.
Some 15% of adults in the 25-to-34 age bracket lived with a parent last year. That’s about 1.3 million people who aren’t looking for a house to buy quite yet.
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4 Comments
Existing v. New
Are the statistics quoted for first time buyers based on new construction buyers or homebuyers in total? My impression is that it is very rare for first time buyers to purchase new construction. When they do, it is usually a condo or a spec. house, so the particular buyer has little influence on construction.
Although younger generations may be more concerned about the environment, other factors limit their ability to spend on energy efficiency in their own homes. First time buyers tend to be limited by down payment, so they are more concerned with initial cost than with operating cost. Often, they are looking at their first home as a stepping stone which they plan to sell within 5-10 years. The best way for a young person to limit their carbon footprint is what 15% of them are doing - living with their parents.
There's no shortage of mortgages for the less affluent
From my vantage (15 years in home finance). It's really all about the cost of land and to a lesser degree cost of labor (I've been told that tract builders are having trouble finding good framers because many self-deported or moved into other trades). Millennials have experienced limited wage growth (like everyone else) and are looking at quality of life (i.e. mobility, shorter commutes).
Scott, you wrote that "the
Scott, you wrote that "the average price for a new house last year was $351,000". Could you add what the median price was? That is actually the more interesting number to me since it reduces the effect of mega-mansions when using a price to reflect the entire market.
@CB
Here's a source.
https://research.stlouisfed.org/fred2/series/MSPNHSUS
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