When Bigger Was Better The Start of Sizing Down

An in-depth analysis of 20 top U.S. markets shows that luxury single-family homes with smaller footprints (2,500 to 3,500 square feet) were selling 18.6% faster than larger single-family homes (4,500 to 5,000 square feet) between April and August 2022, whereas in 2021, the same larger homes sold 21.6% faster than the smaller square-foot homes.

These findings are supported by the latest 2022 new construction statistics. Second quarter 2022 data from the Census Quarterly Starts and Completions by Purpose and Design and a NAHB analysis1 found that the median single-family square floor area inched down to 2,302 square feet. The average square footage for new single-family homes also decreased to 2,498.

There are a number of dynamics at play for why this could be occurring.