If you just bought a newly constructed 2,540-square-foot home and paid $443,200 for it, you are completely average.
Those are the averages for the size and price of new single-family homes recorded in August, according to the latest figures from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development (HUD).
Interestingly, the August median price was $390,900. The median price means that half the homes sold for above that value and half below that. The average price is the result of adding all the sales totals together and dividing by the number of units sold. So a median price that far below the average price suggests there was enough volume of lower-priced homes to pull that figure down.
That would make sense, given the huge flow of big money into that end of the market for single-family rentals (SFRs), for instance. But I digress.
Let's look at the average size of new construction
Soaring prices for new and existing homes alike have gotten a lot of attention. But that's not all that's grown. Let's consider now how much home sizes have grown, too.
The average size of a newly built home recorded in 2Q21 was 2,540 square feet, and the median was 2,297 square feet, compared with 2,473 square feet and 2,265 square feet, respectively, at the end of 2020.
The National Association of Home Builders (NAHB) says that the trend is a continuation of homebuyer interest in more living space and room for working from home -- a result of the pandemic that the trade group says reversed a dip in the average size for new construction that ran from 2016 to 2020.
In an Aug. 23 blog entry, NAHB chief economist Robert Dietz says that the average size of a new single-family home is now 5.5% higher (the median size is about 8.5% higher) than it was in 2009, at the depth of the Great Recession.
Since then, Dietz writes: "Home size rose from 2009 to 2015 as entry-level new construction was constrained. 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 adds.
The Millionacres bottom line
We're talking about single-family homes here. But the same thing can be seen in multifamily units, where construction of larger apartments also is a trend.
All these averages and medians are what's happening in the aggregate, of course, but it's high-level data that can help inform individual decisions by investors in rental properties, flipping plays, and publicly traded companies, including homebuilders and real estate investment trusts (REITs). Looking at how effectively and efficiently the latter two are responding to these market forces is a good way to start.