VOL 2024 ISSUE 7
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VOL 2024 ISSUE 7
BUILDERSOUTLOOK
PUBLISHED BY THE EL PASO ASSOCIATION OF BUILDERS : NATIONAL , STATE AND LOCAL HOME BUILDING INDUSTRY NEWS
Share of Smaller Home Lots Reaches New High
A shift in speculatively built ( or spec ) home building toward smaller lots continued despite the pandemic-triggered suburban flight and presumed shifts in preferences toward more spacious living . The steadily rising share of smaller lots reflects unprecedented lot shortages confronted by home builders during the pandemic housing boom , as well as their attempts to make new homes more affordable . Close to two thirds ( 65 %) of new singlefamily detached homes sold in 2023 were built on lots under 9,000 square feet , which is less than one-fifth of an acre . According to the latest Survey of Construction ( SOC ), this is the highest share on record and reflects stark changes in the lot size distribution over the last two decades . In 1999 , when the Census Bureau started tracking these series , less than half ( 46 %) of new for-sale singlefamily detached homes were occupying lots of that size . The share of lots smaller than 7,000 square feet ( or 0.16 of an acre ) reached 40 % in 2023 — another record reading . Only 28 % of new single-family detached spec homes were built on lots that size in 1999 . A persistent shift towards smaller lots , however , is a more recent phenomenon . The share of lots under one-fifth of an acre was fluctuating around 48 % until 2011 . It was only during the last decade that the share rose rapidly , from 50 % in 2011 to 61 % right before the pandemic and gained an additional 4 percentage points during the last four years . A closer look at the lot size distribution since 2010 shows that most dramatic shifts took place at the lowest end , with lots under 0.16 acres increasing their share by 13 percentage points . In 2010 , 27 % of all sold single-family detached homes occupied lots under 0.16 acres , and an additional 20 % were on lots between 0.16 and 0.25 acres . Fast forward to 2023 , these shares increased to 40 % and 25 %, respectively . At the other end of the lot size distribution , the share of spec homes built on larger lots exceeding half an acre shrunk from 14 % in 2010 to 9 % in 2023 . The share of lots measuring between one-quarter and half an acre declined from 24 % to 18 % over that time span . The Pacific division where densities are high and developed land is scarce has the smallest lots , with half of the lots being under 0.14 acres . The bordering Mountain division also reports typical lots smaller ( 0.16 acres ) than the national median . The analysis above is limited to singlefamily detached speculatively built homes . Custom homes built on an owner ’ s land with either the owner or a builder acting as the general contractor do not involve the work of a professional land developer subdividing a property . Therefore , in the case of custom homes , lots refer to an owner ’ s land area rather than lots in a conventional sense . Nevertheless , the SOC reports lot sizes for custom homes and shows that they tend to have larger lots . The median lot size for custom single-family detached homes started in 2023 is one acre . For the regional analysis , the median lot size is chosen over average since averages tend to be heavily influenced by extreme outliers . In addition , the Census Bureau often masks extreme lot sizes and values on the public use SOC dataset making it difficult to calculate averages precisely , but medians ( as the midpoint of a frequency distribution ) remain unaffected by these procedures . - NAHB