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Home Sizes Are Now Getting Smaller: Here Is What You Need To Know

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Home Sizes Are Now Getting Smaller: Here Is What You Need To Know

It is hard to tell through personal observation, but the average size of a U.S. house is now shrinking, according to CNBC's real estate reporter Diana Olick.

Olick cited data from the National Association of Home Builders (NAHB) and U.S. Census data, both of which confirm the median single-family square floor area fell from the first to the second quarter this year. Granted, it may not be a large decrease, but keep in mind this is the first time the trend has appeared since the recession.

Olick quoted Robert Dietz, NAHB's chief economist who stated that the lower size houses is attributed to "market weakness among first-time buyers." The economist added builders are expected to add more entry-level homes into their inventory.

Related Link: Homebuilders In Focus Following Toll Earnings, Ahead Of Housing Data

"People want to stay in closer-in locations, at least from our experience, and closer-in locations tend to be more expensive from a land and development standpoint and so, the desire to be able to keep people in those locations is translating into smaller square footages and more efficient designs," Bob Youngentob, president of a builder company EYA told CNBC.

Olick also noted that financing is another factor to consider. Mortgage underwriting is "still tight" and larger sized loans are still hard to qualify for. Also, younger Americans appear to want "smaller" and "simpler living" spaces as technology and other creative tracks allows homeowners to do more with less.

Finally, Olick pointed out that luxury homebuilders, such as Toll Brothers Inc (NYSE: TOL) reported a decrease in the average price of its net signed contracts — likely a "reflection of more smaller homes selling."

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Posted-In: Census Data CNBC Diana OlickTop Stories Economics Media General Real Estate Best of Benzinga

 

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