REAL ESTATE TRENDS...U.S. New-Home Sizes Set Record Last Year

• By
 
• NICK TIMIRAOS
 

Like waistlines, American homes keep getting bigger.

The median size of completed homes last year hit a new record of 2,415 square feet, according to the Commerce Department.

Home sizes grew in every year between 1995 and 2007, but they fell during the recession as builders went small to compete with cheap foreclosures.

When the recession hit, “all the pundits [said], ‘The McMansion is dead,’” Douglas Yearley, chief executive of luxury home builder Toll Brothers Inc.TOL +0.34% told investors last fall. “But the American dream is still to chase the big beautiful home with the lavish master suite and the spectacular gourmet kitchen and the finished basement that has the wine room and the media room.”

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Home sizes are rising even as sales have slowed because builders have competed for affluent buyers who aren’t likely to run into trouble qualifying for a mortgage and saving for a down payment. In January, builders sold 481,000 homes at a seasonally adjusted annual rate, down 0.2% from December, the Commerce Department said Wednesday. Sales in 2014 were up just 1.9% from the year before.

At the same time, builders sold slightly more homes priced above $400,000 than those priced below $200,000 for the first time ever last year. Around 4.8% of homes sold for at least $750,000, a new record.

Still, there are signs that home sizes won’t set new records this year. The size of homes in which builders started construction ticked down last year after peaking in the first quarter. That could be a sign builders have concluded that they need to refocus on entry level buyers if they want to increase sales.