by Bill McBride on 6/04/2015 04:21:00 PM
Thursday, June 04, 2015
Lawler: Characteristics Homes Built in 2014; Construction of “Moderately-Sized” SF Homes Remained Low in 2014.
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|
|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.