New homes are shrinking as builders try to contain costs

Builders are putting the squeeze on new homes to lower costs.

The average new home size across the country is declining in response to higher house price tags and more buyers wanting to downsize.

But the typical new home still has plenty of room at about 2,500 square feet last year.

“It peaked at 2,689 square feet in the 2016,” said Rose Quint, a top researcher for the National Association of Home Builders. “In the last four years, we have seen the average size of new homes decline every year.

“It’s the smallest house size we have put in the ground since the year 2011 in this country,” Quint said at the building industry’s annual show last week in Las Vegas.

Homes being built in the U.S. are about the same size as what builders were providing before the Great Recession. But the price tags are much higher.

In 2005, the median price of new houses in Dallas-Fort Worth was about $176,000. Now a midpriced single-family home in the area costs around $350,000.

With similar price increases in most states, builders are worried that they are pricing buyers out of many markets. So builders are trimming sizes and reducing frills to rein in costs.

Dallas-Fort Worth new home sizes are still ahead of the national average.

In 2019, the average new home sold in North Texas was 2,774 square feet, according to housing analyst Metrostudy Inc.

D-FW home sizes have fallen from the record 2,910 square feet average set in 2015.

One way for builders hold down costs is to downsize the number of bedrooms. Less than 45% of homes built nationally in 2019 had four or more bedrooms, according to the National Association of Home Builders’ latest studies.

“It’s been edging down in the years” since the recession, Quint said. “It’s the smallest share since the year 2012.”

Big garages are also starting to shrink in number of stalls and overall size.

Consumers are also doing their part, turning their noses up at over-the-top home features.

You’ll find fewer of those grand two-story entries and family rooms in new houses.

“A lot of consumers consider those high spaces difficult to heat and cool, so builders are shying away from them,” Quint said.

About 12% of first-time buyers say they want no parking at all.

“What does that tell us — they have no cars,” Quint said.

Buyers still have their lists of must-haves in a new house. Some of their make-or-break home features include laundry rooms, hardwood floors, energy-saving windows and ceiling fans.

Topping the features that turn them off are elevators, wine cellars, pet washing stations and rooftop plantings.

“People are not going to be willing to pay for these things for the most part,” Quint said. “Nobody wants a roof covered by plants.”

More than 60% of buyers say they want to purchase in the suburbs.

“Fifty-nine percent of first-timers want to buy that home in the suburbs,” Quint said. “Only 15% want the central city.”

More than three-fourths of buyers say they want a traditional single-family home, not a townhouse or condo.

Almost 80% of potential buyers polled said they are looking for open-concept kitchen and living areas, instead of the compartmentalized floor plans many of them grew up with.