US houses are bigger, but fewer people are living in them

·Associate Editor

Houses in the U.S. are getting bigger, but the families living in them are getting smaller.

According to a recent analysis by DataTrek, the size of American households has decreased, even as the size of houses has steadily increased. Since 1960 the number of people per U.S. household has fallen from 3.3 average people per household 59 years ago to 2.5 today.

In other words, fewer people live in bigger houses, DataTrek’s analysis found. But in recent years, this trend has slowly begun to reverse, and there are signs that houses will continue to get smaller.

In 1973, the average home size in the United States was 1,660 square feet. That number got all the way up to 2,700 square feet in 2015, but in the last few years has seen a slight dip and is now at 2,523 average square feet.

DataTrek noted that the growing size of homes is being bolstered by a rise in single-person households, in part because more women have careers, and choose to live alone. The firm noted that only 13% of households were single-person in 1960, but that number has more than doubled to 28%.

“The reasons for this shift are both societal and demographic. Greater female workforce participation has allowed women to be economically self-sufficient and live alone if they choose,” the firm’s analysts noted.

“An aging population also adds to 1-person households as men [die before] women by an average of 5 years,” it said.

Yet the trend isn’t bad for several reasons.

DataTrek said that the combination of smaller households and bigger homes has been a “long run tailwind” for the economy in more ways than one.

“Larger homes need more ‘stuff’, and fewer inhabitants mean less sharing of the same,” DataTrek said.

“And this does not include the 2.3 billion square feet of self-storage space in the US, which stores everything those +2,000 square feet houses cannot hold,” the firm said.

Yet home sizes now appear to be reversing, which makes DataTrek cautious about homebuilding stocks, such as Meritage (MTH), LGI Homes (LGIH) or Lennar (LEN), among others.

DataTrek wrote that “a combination of lower household density, aging demographics, and increasing land costs means new house sizes will continue to decline.”

Big homes will still be a staple of real estate, “but as the typical American household continues to shrink so will the marginal supply of new, larger dwellings.” DataTrek said. “Peak house size is not good news.”

Calder McHugh is an Associate Editor at Yahoo Finance. Follow him on Twitter: @Calder_McHugh.

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