Issue link: http://digital.nexsitepublishing.com/i/1496538
BY ROBERT DIETZ, PH.D.
CHIEF ECONOMIST
NATIONAL ASSOCIATION
OF HOME BUILDERS
@DIETZ_ECON
Home Trends and Buyer Preferences
A
fter the Great Recession
and through 2015, the
average new home in the
US grew larger every year (Fig.
1). During that period, new
homes were likelier to include
three or more full bathrooms,
four or more bedrooms, and
three-car or larger garages.
Strict underwriting rules for
mortgages meant that new
homes reflected those buyers
able to access financing:
wealthier, equity-rich
households who tend to favor
larger homes with amenities.
From 2016–2020, credit
conditions eased significantly,
helping younger and first-time
buyers reenter the market.
The average size of new
homes declined, reflecting the
preferences of the expanded pool
of buyers. In 2021, however, the
average size increased to 2,525
square feet from 2,472 due to
COVID-19 and low interest rates.
The pandemic catapulted homes
into multiple roles (shelter, work,
school, gym), leading buyers to
demand more space.
The characteristics of new single-family homes depend
closely on who is buying the homes.
By 2022, new home prices had
skyrocketed (up nearly 40% since
the start of the pandemic) and
construction labor and materials
were expensive and difficult to
find. The average size of new
homes fell to 2,480 square feet as
builders strove to meet demand
amid worsening affordability.
What are the most likely
features of the typical home in
2023? At least 90% of builders
said in a recent survey they are
likely/very likely to include:
• Walk-in closet in the
master bedroom
• Laundry room
• Low-E windows
• Great room
• Central kitchen island
• Efficient lighting
• Programmable thermostat
Most builders are also likely to
include 13 additional features
(Fig. 2), including home offices
which saw increased demand
with the pandemic. According
to most builders, COVID-19 also
increased interest in exterior
amenities, home technology,
open/flexible floor plans,
larger and/or better equipped
kitchens, and maintenance-
free materials.
Ultimately it's the customer
that drives what gets built.
A recent International
Builders' Show survey
revealed that a majority of
both first-time buyers and
repeat buyers prefer to buy
single-family detached homes
over other types of structures.
The majority of both groups
prefer suburbs over urban or
rural areas. Just over half of
first-timers prefer two-story
homes, while 61% of repeat
buyers prefer single stories.
Partially open kitchens, family
rooms, two or two-and-a-half
baths, and first-floor laundry
equipment are popular among
both groups. First-time buyers
are more likely to prefer
electricity over gas for heating
and cooking, while repeat
buyers prefer gas.
Fig.1 Size of New Single-Family Homes Started
(Average sq. ft.)
2000 2007 2009 2015 2020 2022
2,499
2,362
2,472
2,480
2,689
2,525
2,297
Fig. 1 Size of New Single-Family Homes Started
(Average sq. ft.)
Fig 2. Most Likely Features in a 2023 New Home
(% of Builders Rating Likely to Very Likely)
97%
95%
94%
94%
94%
91%
90%
Walk-in closet in primary bedroom
Laundry room
Low-e windows
Great room
Central island in kitchen
Efficient lighting (