A typical single-family home under construction -- the most forward-looking statistic -- peaked at 2,629 square feet during the second quarter of last year, according to the Census Bureau. By the fourth quarter, it had dropped to 2,343. It rose to 2,419 in the first three months of this year, data released last week show.
It's hard to measure the plunge against those in previous downturns because data on the size of homes under construction aren't available going back to the 1970s. But a comparison of the available figures with other census categories, such as the slightly less-timely "square footage of homes sold," show that the drop is the sharpest since 1978.
The shrinking of the American home coincided with a tightening in lending standards, which reduced the amount of money left for the few remaining home buyers. Builders scrambled to shrink their product accordingly.
Before the bust, Scottsdale, Ariz.-based Meritage Homes Corp. had built houses as large as 4,500 square feet. Starting in the second quarter of last year, the firm stopped constructing anything more than 2,800 square feet, said Chief Operating Officer Steve Davis.
"We've scaled back to the late-'90s" sizes, said Davis, whose company builds homes in Arizona and in California's Inland Empire, along the Interstate 15 corridor.
Like other builders, Meritage tries to shrink houses without sacrificing the number of bedrooms. Its smaller models combine dining rooms and living rooms, minimize hallways and rely on other design techniques to limit square footage.
Davis said that the days of the 5,000-square-foot home might be over but that he wouldn't be surprised if buyers craved larger houses again.
Westwood-based KB Home this spring introduced a line of customized, smaller houses in Southern California and other markets. It was called the Open Series, which analysts credit for the company's 26% rise in ordered homes. "Homes must change with the times," Chief Executive Jeffrey Mezger said in an earnings call with investors in March.
In Yuma, a fast-growing Arizona city where the real estate bust has hit hard, developers saw that only cheaper properties were selling. The Development Group, which had planned to erect 2,500-square-foot homes at the Terraces, first slimmed them down to about 2,000 square feet. Now it's planning houses of 1,700 square feet.
The price dropped too, to just below $200,000, from a range of $287,000 to about $350,000.
