Thursday, June 16, 2016

Lawler: Single-Family Home Production in 2015: Small Number, Big Homes

by Bill McBride on 6/16/2016 02:45:00 PM

From housing economist Tom Lawler: Single-Family Home Production in 2015: Small Number, Big Homes

At the beginning of June the Census Bureau released its annual report for 2015 on the characteristics of new privately-owned residential structures, including but not limited to square footage, number of bedrooms and bathrooms, type of wall material, and sales prices. In terms of single-family homes completed last year, one of the more striking aspects of the report was the incredibly small number of modestly-sized single-family homes completed last year. Below is a summary of homes completed from 1999 to 2015 by square-footage ranges.

Of the estimated 648,000 single-family homes completed last year, just 136,000, or 21%, were homes with square footage of less than 1,800. The number of “moderately-sized” single-family homes completed in 2015 was little changed 2011, when overall single-family home completions hit at a “record” low. In sharp contrast, the number of homes with 3,000 or more square feet of floor area last year was up 76% from 2011’s level.

Single-Family Homes Completed by Square Footage
  Number of houses (in thousands) by square feet
YearTotal Under
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
2015648 49 87 171 138 132 72


Lawler Median House Size Click on graph for larger image.

Here is a chart showing the historical median square footage of single-family homes completed.

It is a little difficult to compare the distribution of single-family homes completed in recent years relative to earlier decades, because Census has changed the square-footage ranges in its reports over time. However, from 1999 to 2007 there are data for both the “old” ranges and the “new” ranges, and by looking at some historical relationships one can approximate completions for various ranges over time, which I have done in the table below.

Average Annual Single-Family Homes Completed by Square Feeet of Floor Area
  Total<1,6001,600-
1,999
2000-
2,399
2,400-
2,999
3,000+
1973-791,1405742591589455
1980-8997845320713410875
1990-991,070319242189170151
2000-091,259269261224230274
2010496 1111018587112
2011447 96867079116
2012483 92917993128
2013569 8810497115166
2014620 89106102131193
2015648 90109108138204
(LEHC estimates based on Census data. Totals may not add up due to rounding).


There have been numerous articles over the last year or two discussing some of the possible reasons for the dearth of construction of moderately-sized (and priced) single-family homes over the past few years, and I won’t today discuss the “why’s.” However, it seems highly unlikely that single-family starts (and completions) will move back up to more “historic” levels unless there is a rebound in the construction of “smaller,” and less expensive, homes.