In addition to monthly statistics on residential construction released by the US Census earlier this week, there was also a quarterly update on attributes of newly started homes. The data tends to have pretty severe seasonality, so we have seasonally adjusted all of the series below.
Starting with who starts home construction, the vast majority of houses are built for sale by a builder. While there are some owner-built homes, contractors are about twice as common when it comes to single family houses. Multifamily starts are almost exclusively built for rental, with the number started for sale remaining near record lows.
Single family homes are almost always detached, free standing on all four sides. Homes that are attached to others but are still single family are less common. Note the massive drop-off in detached during the housing crash. We’re still not even back to average pre-housing bubble levels for detached single family starts at this point.
Among multifamily units, there used to be a respectable number of multifamily starts with less than 20 units, but over the last half decade or so virtually all starts of multifamily projects have involved projects with more than 20 units.
Finally, the Census also details the size of houses that have been started in the most recent quarter. As shown, from the 1990s to the mid-2010s, the median square footage of newly started homes rose by 20%. Since then, however, changes in taste and affordability have forced builders to economize: median square footage has dropped to the lowest levels since the 2010s and is still falling. Based on square footage trends, it looks like “McMansion Hell” peaked in 2013 and slowly but surely people are coming to their senses. More expensive land reducing footprints, less preference for space, and a desire to reduce sticker prices have all driven lower square footages.
For multifamily, the size of unit starts is a little bit more volatile and hasn’t tended to rise or fall consistently over time. Sign up for Bespoke’s “2020” special and get our upcoming Bespoke Report 2020 Market Outlook and Investor Toolkit.
