New Home Buyers Like Smaller Footprint

New York, NY, Dec. 17, 2009--New home buyers are opting for a smaller footprint, according to the National Association of Home Builders.

Builders are offering smaller designs with features such as high ceilings and large windows that create a spacious feel and options that let buyers personalize the model they choose.

KB Home said a smaller model helped it achieve a 62% increase in year-over-year net orders in the third quarter.

The median square footage of new homes has dropped 9% from a peak of 2,300 square feet in the third quarter of 2006 to 2,100 square feet in the July-September period this year, according to NAHB.

Although housing size drops with each recession, economists expect the current movement toward smaller homes to continue for some time in part because of the severity of the current housing market slump.

First-time buyers are driving the trend toward smaller homes because that is what they can afford, the NAHB said.

As the economy improves, move-up buyers generally enter the market and begin buying larger homes. But this time, so many homeowners owe more on their homes than their properties are worth that many potential move-up buyers will be stuck even as the economy strengthens.

That means first-time home buyers will still be buying smaller homes while larger homes will find fewer buyers.