New homes growing in size
According to the National Association of Home Builders (NAHB), in the last four years, the average size of new homes has increased 13.4 percent from 2,362 square feet in 2009 to 2,679 square feet in 2013. The Association also reports that the share of new homes with at least four bedrooms has increased from 34 percent in 2009 to 48 percent last year.
The share of new homes purchased with at least three full bathrooms rose from 23 percent in 2010 to 35 percent in 2013, and homes with at least three garages rose from 16 percent in 2010 to a whopping 22 percent in 2013.
More house, more money
As homes get bigger, so does the average sales price, rising from $248,000 in 2009 to $318,000 in 2013. To find out why homes are getting so big you need to look at who is buying them.
Rose Quint, NAHB assistant vice president for survey research said, “It requires a high credit score and a nice income to qualify for a mortgage,” noting that the spread between the average Experian credit score of all U.S. consumers and the average home borrower’s score has risen from 33 points in the early 2000s to 58 points in 2013.
The median income of new-home buyers has steadily climbed from $91,768 in 2005 to $107,607 in 2011.
Meanwhile, sales are down
During the same period, the number of new-home sales has dramatically declined, from 1.28 million to 306,000.
“There are not as many people who have the income that can qualify for a new home,” said Quint.
Lending remains tight not only for buyers but for builders, particularly smaller builders who rely on funding for building supplies and staffing. New home sales have fallen, and so have existing home sales, which are now somewhat stagnant but the bottom line is that all signs point to continued improvement for the housing sector.
Lending will not likely loosen up in short order, so watch for sales to slow their pace of improvement, and watch as the size of new homes balloons.