Nation’s biggest builders are making houses smaller in shift toward affordable housing: Report

Mahoney Asset Management CEO Discusses Housing Data and Economic Outlook

US Experiencing Boom in Smaller Construction, According to Report

A new report from The Washington Post has highlighted a trend of smaller construction in the United States, with some of the nation’s most powerful home builders now constructing smaller homes than before. The median size of new homes built today is 2,179 square feet, which is 4% smaller than last year.

The report cites census data, which shows that this decrease in size is the lowest reading since 2010. In 2015, the median size of new homes reached its peak at around 2,450 square feet.

Shift to More Affordable Housing

This downsizing in new homes is seen as a response to the current housing crisis and a shift towards more affordable housing options. Building smaller homes has helped bring down overall costs and contributed to a 6% decrease in new-home prices.

Americans have shown a preference for smaller homes, such as townhouses, which have become increasingly popular. According to the National Association of Home Builders, townhouses accounted for 1 in 5 new homes under construction at the end of 2023, a record high.

To cut costs, companies are building smaller and taller homes with fewer windows, cabinets, and doors.

Addressing the Starter Home Shortage

This downsizing is seen as a crucial first step in addressing the critical shortage of starter homes, which first-time home buyers have been seeking. The shortage of starter homes has contributed to inflation in the housing market.

Smaller homes can be thousands of dollars cheaper for both builders and buyers, providing cost benefits in an increasingly unaffordable housing market.

Response to the Housing Crisis

The downsizing trend in new homes has gained momentum, especially after the COVID-19 pandemic. Families with extra pandemic savings and benefiting from rock-bottom interest rates sought larger homes. As a result, median home prices have increased by 28% in the past four years, making homes less affordable than ever.

Builders are now responding to the demand for smaller, more affordable homes. Building large homes has become expensive, leading builders to focus on smaller options that are cheaper and faster to build.

For example, D.R. Horton, the country’s largest home builder, sold over 82,000 homes last year, most of them under $400,000 and to first-time buyers. Their lineup now starts at about 900 square feet. Luxury home builders like Toll Brothers have also shifted their focus to producing lower-priced options.

Challenges and Future Outlook

While the trend towards smaller homes provides hope for first-time homeowners, it only represents a small portion of the overall housing market and tends to be pricier than existing homes. It would take sustained growth over several years to build enough homes to satisfy demand.

Furthermore, Americans are still conditioned to believe that bigger houses are better, posing a challenge to the acceptance of smaller homes.

SDGs, Targets, and Indicators

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 11: Sustainable Cities and Communities
• SDG 12: Responsible Consumption and Production
• SDG 8: Decent Work and Economic Growth

2. What specific targets under those SDGs can be identified based on the article’s content?

• SDG 11.1: By 2030, ensure access for all to adequate, safe and affordable housing and basic services and upgrade slums.
• SDG 12.2: By 2030, achieve the sustainable management and efficient use of natural resources.
• SDG 8.5: By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Median new home size (in square feet)
• New-home prices
• Percentage of townhouses in new homes under construction
• Number of homes sold by D.R. Horton

Table: SDGs, Targets, and Indicators

The article addresses the issue of smaller new homes being built in the U.S., which is connected to SDG 11 (Sustainable Cities and Communities) as it focuses on ensuring access to adequate, safe, and affordable housing. It also relates to SDG 12 (Responsible Consumption and Production) as it highlights the need for sustainable management and efficient use of natural resources. Additionally, it touches on SDG 8 (Decent Work and Economic Growth) as it discusses the impact of the housing industry on employment and economic growth.

The specific targets identified based on the article’s content are Target 11.1 (access to adequate, safe, and affordable housing), Target 12.2 (sustainable management and efficient use of natural resources), and Target 8.5 (full and productive employment and decent work).

The indicators mentioned or implied in the article that can be used to measure progress towards the identified targets are the median new home size (indicating access to affordable housing), new-home prices (reflecting the sustainable management of resources), the percentage of townhouses in new homes under construction (related to affordable housing options), and the number of homes sold by D.R. Horton (indicating employment and economic growth in the housing industry).

Behold! This splendid article springs forth from the wellspring of knowledge, shaped by a wondrous proprietary AI technology that delved into a vast ocean of data, illuminating the path towards the Sustainable Development Goals. Remember that all rights are reserved by SDG Investors LLC, empowering us to champion progress together.

Source: foxbusiness.com

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