Builders focusing more on new middle-income housing
WASHINGTON – Feb, 18, 2019 – Many developers are beginning to cater to moderate-income buyers as sales have slowed due to a lack of supply in this segment. So-called "missing middle housing" includes duplexes, courtyard apartments, bungalow courts, and multiplexes.
Data from the National Association of Home Builders (NAHB) shows that the average size of new single-family homes fell for the third straight year in 2018 to a median of 2,320 square feet from a peak of more than 2,500 square feet in 2015. This suggests that entry-level buyers and those looking for starter homes will have more options down the road, and it also will help other buyers whose credit issues have made it difficult for them to get a mortgage.
"We've reached the point where the smaller part of the market needs additional inventory," says NAHB chief economist Robert Dietz. "That's where price growth has been the fastest due to the lack of inventory. Younger buyers are trying to find entry-level housing."
Observers note that smaller homes are generally built during recessions and larger homes during boom times. However, Dietz says, "What's going on is that average new home size really ramped up after the Great Recession because the market shifted away from entry-level homes. Builders are now making up for lost time rather than reacting to a market that has turned."