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The pandemic has been driving demand for bigger new homes

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The demand for larger houses is trending upward, which could lead to disruption in the market. SDI Productions / Getty Images

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Today, the U.S. Census reports statistics on new residential construction for March, including housing starts – that’s the breaking of ground on new residential construction, as well as the establishing of building permits. 

One housing trend we’ve seen during the pandemic is demand for larger homes, a trend that could derail the momentum for smaller home construction. 

The average size of a new American home peaked at nearly 2,700 square feet in 2015

After that, Robert Dietz, chief economist at the National Association of Home Builders, said it trended downward for several years as millennials started buying their first homes. 

Then, the pandemic hit. 

“Work from home increased, exercising at home, eating at home,” he said.

Now, Dietz said many buyers want bigger floor plans and more home office space. 

“And I do think some of the changes we’ve seen to a preference for more space in the homes is going to be a persistent change as a result of COVID,” he said.

That works for buyers who can afford those larger homes. But Sonia Hirt, professor at the University of Georgia, said, “I think the situation is extremely difficult for first-time buyers.”

With the costs of building and maintaining homes on the rise, she said more and more potential buyers could be priced out of these larger homes. 

“Eventually if it’s not sustainable people will stop buying them,” she said.

Then, Hirt said we could see the trend reverse again. 

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