US Builders Are Now Constructing Homes in Smaller Lots

home construction
Image Source: Giles Douglas, CC BY 2.0

While many Americans demand larger houses, home sizes are generally decreasing these days as builders try to meet the needs of those having only smaller lots.

According to CNBC, the median size of single-family houses has slightly dropped starting in the first two quarters of last year. This trend was partly driven by people’s desire to settle closer to community cores. Also, lot sizes vary considerably from one region to another depending on availability and zoning regulations. For example, the National Association of Home Builders found that lots in New England are larger than those in the Pacific States during the last quarter of 2016.

NAHB chief economist Robert Dietz wrote:

“This pattern was exacerbated during the current business cycle due to market weakness among first-time homebuyers. But the recent small declines in size indicate that this part of the cycle has ended and size should trend lower as builders add more entry-level homes into inventory.”

Another reason for this trend to occur is the profit potential brought by building more square footage with lower upfront property cost. As it has been pointed out, the significant decreases in lot sizes experienced over the years reflect a considerable growth of home prices.

Still, the task of maximizing a house’s footprint on smaller lots can face certain challenges in some jurisdictions. For example, the city council of Los Angeles, California has mandated to decrease size allowances for single-family houses on lots that are not more than 7,500 square feet, from 50% to 45%.