Based on a new survey by the National Association of Home Builders, millennials say their housing preferences have changed due to the COVID-19 pandemic. More than a third (36%) of millennials are now in favor of a larger home and home builders are responding to this trend.
According to the Census Quarterly Starts and Completions by Purpose and Design and National Association of Home Builders (NAHB) analysis, the median size of new single-family homes in 2021 was 10% higher since the Great Recession (2009) at 2,303 square feet. The shift aligns with NAHB's home buyers' preferences analysis, which shows millennials and Gen Xers prefer more bedrooms and are also interested in exercise rooms and home offices.
"The home building industry expects to see home sizes continue to increase due to a shift in consumer preferences as more activities are taking place in the home in the post-pandemic environment," said NAHB Chairman Jerry Konter. "Builders are trying to keep up with demand, but higher construction costs are hindering housing affordability."
NAHB's fourth quarter 2021 Housing Trends Report revealed that buyer availability expectations worsened throughout the year across all generations. Only 34% of millennials expected that finding a home would be easier in the months ahead and a majority (67%) of active buyers are spending more than three months looking for a home.
According to recent data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, the median new homes sales price in February was $400,600, up 10.6% compared to a year ago. New home prices have increased as building materials and other development costs have climbed due to supply-chain issues and elevated inflation pressures. In addition to construction cost challenges, higher mortgage rates in 2022 will further reduce housing affordability conditions.
To address the affordability crisis, NAHB is calling on policymakers to seek immediate remedies to the lumber and building materials supply chain bottlenecks that will increase production and lower construction costs.