In 2023, home construction activity declined for the second consecutive year. Single-family housing starts dropped by 7.1% from 2022 and 16.5% from 2021. Despite this slowdown, housing supply is growing faster than before the pandemic as builders focus on higher-density options such as townhomes and condos to address a 4.5 million home shortage and attract first-time homebuyers.
According to housing market platform Zillow, approximately 946,000 single-family homes were completed in 2023, marking the second-highest total since the financial crisis. While detached home starts fell by 8.9% in 2023, attached home starts grew by 3.2% and condo starts increased by 8.1%. At the same time, detached home completions declined by 5.1%, but completions of attached homes rose by 9.6%.
Focusing on attached homes allowed builders to overcome some of the challenges related to land costs, and build more units on smaller lots. As a result, the median lot area fell by 700 square feet in 2023 when compared to the previous year. The median home size remained steady at 2,200 square feet. Along with smaller lot sizes, the number of single-family starts with a porch or patio also fell.
