1. In 2013, the average size of new houses built increased to an all-time high of 2,679 square feet (see blue line in top chart), and the median size new home set a new record of 2,491 square feet (see red line in chart). Over the last 40 years, the average home has increased in size by more than 1,000 square feet, from an average size of 1,660 square feet in 1973 (earliest year available from Census) to 2,679 square feet last year. Likewise, the median-size home has increased in size by almost 1,000 square feet, from 1,525 square feet in 1973 to 2,491 last year. In percentage terms, the average home size has increased by 61.4% since 1973, while the median home size increased by 63.3%.
2. Meanwhile, the average household size has been declining, from 3.01 persons per household on average in 1973 to a new record low of 2.54 persons per household last year, a reduction of almost one-half person per household over the last 40 years (see brown line in top chart).
With the average new house in the US getter larger in size at the same time that American households are getting smaller, the square footage of living space per person in a new home has increased from 506.6 to 980.7 square feet using the median size home, and from 551.5 to 1,054.7 square feet using the average size home. In percentage terms, that’s a 93.6% increase using the median home size and a 91.2% increase using the average home size. In either case, the average amount of living space per person in a new home has almost doubled in just the last forty years – that’s pretty amazing.
3. What about the cost of new homes over the last 40 years? On a per square foot basis using median home prices and median square footage, the inflation-adjusted price of new homes has been relatively stable since 1973 in a range between about $105 and $125 per square foot (see bottom chart above). And the price of just under $106 per square foot for new homes in 2013 was almost 16 below the peak of $125.50 per square foot for a new home in 2004, and also below the cost per square foot in every year during the 1970s and 1980s, and below every year of the 1990s except 1992 and 1993.
Bottom Line: We hear all the time about stagnating household incomes, the decline of the middle class, rising income inequality, and lots of other stories of gloom and doom for Americans. But when it comes to the new homes that Americans are buying and living in, we see a much brighter picture of life in the US. The new homes that today’s generations are buying are larger by 1,000 square feet compared to the average new homes our parents might have purchased in 1973, and are almost double in living size today adjusted for household size compared to 40 years ago.
And of course today’s new homes, compared to those built in the past, are much more energy-efficient; they come with better, bigger and more bathrooms, closets, and garages; they’re equipped with better and more home appliances; and they almost all include modern features like central air conditioning today that might have been expensive options in previous decades like the1970s. We’re paying a little more today for new homes only because the average size is increasing, but on an inflation-adjusted basis, we’re actually paying slightly less today than the cost per square foot in 1973. Overall, the increasing size, improving quality, and relative affordability of new homes today means that living standards continue to gradually, but consistently, improve year after year for most Americans.