Thursday, June 04, 2015

Lawler: Characteristics Homes Built in 2014; Construction of “Moderately-Sized” SF Homes Remained Low in 2014.

by Bill McBride on 6/04/2015 04:21:00 PM

From Housing economist Tom Lawler:

Earlier this week the Census Bureau released its annual report on the Characteristics of New Housing Units Completed/Sold for 2014. The report, based on data collected from the Survey of Construction, includes (among a lot of other things) estimates for the number of housing units completed or sold by square feet of floor area, number of bath rooms, and number of bedrooms. On the single-family home front, one of the most striking statistics for the last few years (including 2014) is the incredibly small number of moderately-sized (and priced) homes built. Here is a table from the report showing the number of single-family homes completed by square feet of floor area from 1999 to 2014.

Compared to 2000, the number of single-family homes completed in 2014 was down by 50%. The number of homes completed in 2014 with square footage below 1,800 was down by a staggering 70%, while the number of homes completed with square footage of 4,000 or more last year was unchanged from 2000! And the number of single family homes completed with square footage below 1,800 last year showed no increase from 2013’s record low.

Square Feet of Floor Area in New Single-Family Houses Completed1
(Components may not add to totals because of rounding)
  Number of houses (in thousands) by square feet
YearTotalUnder
1,400
1,400 to
1,799
1,800 to
2,399
2,400 to
2,999
3,000 to
3,999
4,000 or
more
19991,270 197 276 370 211 157 59
20001,242 178 268 363 208 158 66
20011,256 167 261 359 222 172 75
20021,325 172 283 375 240 180 76
20031,386 179 279 401 251 199 77
20041,532 186 311 433 291 219 92
20051,636 165 317 467 306 262 119
20061,654 164 312 452 326 263 137
20071,218 120 220 335 227 202 115
2008819 104 146 219 138 127 84
2009520 66 106 139 89 72 48
2010496 66 96 135 87 75 37
2011447 57 84 111 79 76 40
2012483 53 83 126 93 88 40
2013569 46 89 154 115 110 56
2014620 48 87 162 131 127 66
1Includes houses built for rent, not shown separately

Below is a longer-run chart showing the median square footage of single-family homes completed. (I can’t show a longer-run chart by similar square-footage ranges, as Census changed its ranges.)

During most of the 1970’s and the first half of the 1980’s, over half of new single-family homes completed had square footage at or below 1,600.

While the de minimus production of moderately sized and priced new single-family home production over the past few years almost certainly reflects extremely low purchase volumes from entry-level buyers, there is some debate regarding how much of this weak production/sales reflects weak demand, and how much reflects “supply” issues (e.g., an inability of many builders in many markets to produce small, moderately-priced homes at high enough profit margins to make it worth there while.)

Those looking for an eventual rebound in single-family housing production to more “normal” unit levels should realize that such a rebound is extremely unlikely without a major increase in the production of smaller, more moderately priced homes.