New-Home Shoppers Are in Upgrade Mode

June 4, 2014

The new-home market in the last year has largely been driven by the upper tier, resulting in record-setting rises to the number of bedrooms, bathrooms, and garages being added to new homes, according to U.S. Census Bureau data released Monday. 

Forty-four percent of homes built last year had at least four bedrooms, the highest percentage recorded since the Census began tracking the statistic in 1973, and up from 41 percent in 2012, according to the Census data. 

Another survey high: The percentage of homes built last year with at least three bathrooms grew from 30 percent in 2012 to 33 percent last year. 

New-home shoppers also are adding garages. The percentage of homes built with a garage for at least three cars rose to 21 percent last year -- another survey high and up from 19 percent in 2012.

To accommodate the desire for more bathrooms, bedrooms, and garages, homes are getting larger. The median size of a newly built home was 2,384 square feet last year, up 3.4 percent over the previous year. Square footage has steadily been increasing since 2009.

“The market’s shift to bigger homes with more amenities is a product of builders catering more to better-heeled buyers searching for their second- or third-generation homes,” The Wall Street Journal reports. “Those move-up buyers have accounted for more home purchases than usual since the downturn as first-time and entry-level buyers remain sidelined by tepid wage growth and stringent mortgage-qualification standards.”

The median price of a new home reached $268,900 last year, reaching another Census survey record high.  

David Weekley Homes, a Houston-based builder, reports that more buyers are adding upgrades to their new homes, adding greater focus to upgrading flooring and adding extra rooms, such as a study and media room. Weekley’s average sales price rose 11.5 percent in 2013 compared to 2012, with the average sales price reaching $387,000 last year. 

Source: “The U.S. Goes From Big to Still Bigger on the New Home Front,” The Wall Street Journal (June 2, 2014)

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