In the wake of the Great Recession and in response to rising costs of labor, land, and materials, along with stricter financing for borrowers, home builders have been focusing more on the high-end, keeping many prospective buyers out of the market.
Yet, in the third quarter of 2018, the one-year moving average size of the new single-family home decreased, as did the one-year moving median; average and median home sizes have been dropping steadily since the second quarter of 2015, according to the National Association of Home Builders' analysis, and as Jeff Andrews writes for Curbed, this may mean that builders are now turning their attention more toward building entry-level homes.
National Association of Home Builders economist Robert Dietz notes that a rise in townhouse construction and a drop in high-end custom home building also points to builders turning to entry-level homes. But he also notes that home size drops tend to come during or before an economic recession, predictions of which have come fast and furious, particularly in light of the recent stock market selloff.