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New NAHB study indicates smaller home construction to outlast recession


A recent study by the National Association of Home Builders found the average median size single-family home shrank from 2,268 square feet in 2006 to 2,100 square feet in 2009. What’s more: The trend toward smaller homes is expected to continue even after the economy recovers.

Dr. Paul Emrath, vice president of survey and housing policy research at the NAHB, studied census data from 2006 to 2009 and authored Characteristics of New Single-Family Homes Started in 2009. His findings show bigger, bulkier homes are being replaced by smarter, smaller homes that prioritize energy efficiency over myriad luxuries.

That’s not to say common needs aren’t being met. There’s been little change in the average number of bedrooms and bathrooms. (Bedrooms went from 3.35 per home in 2006 to 3.28 in 2009; bathrooms decreased from 2.25 per home to 2.20 over the same period.) Dr. Emrath says builders should take note when planning spec homes.

In an interview with the Builder Blog earlier this week, Dr. Emrath said, “Typically, builders with knowledge of trends in consumer preferences such as a preference for slightly smaller homes in their market areas can take advantage of this by building spec homes with the appropriate features.”

Appropriate has become synonymous with efficient. For example, homes built with a fireplace fell from 54.8 percent in 2005 to 48.8 percent in 2009. Meanwhile, more homes now include energy-efficient heat pumps, which evenly distribute warmth throughout the home. Homes with heat pumps have increased from 31.4 percent in 2005 to 38 percent in 2009.

In the study, Dr. Emrath writes the recession of the early 1980s, combined with stricter loan practices and a turbulent re-sale market, has influenced builders and consumers alike to stay closer to pocket:

Part of the current home size decline may again be a temporary recession-related phenomenon. But part can also be attributed to trends in factors like the desire to keep energy costs down, amounts of equity in existing homes available to roll into a new one, tightening credit standards, less emphasis on the pure investment motive for buying a home, and an increased share of homes sold to first-time buyers. Not all of these trends are likely to reverse themselves immediately at the end of a recession.

New starts were down from 1.73 million in 2006 to about 440,000 in 2009 – a direct result of the recession. One byproduct of the market is a slower transition toward alternative building and framing materials. With fewer opportunities to start new homes, wood building and framing systems accounted for about 95 percent of 2009 starts.

“Cost differences often are responsible for slowing transition to alternate construction techniques,” Dr. Emrath said. “This includes not only the cost of various materials, but the cost of re-engineering the house and re-training the work force. The constraints are especially severe at present when production is suppressed below normal levels and builders have relatively few units to spread engineering and training costs over.”