Pending Home Sales Increased in August
The typical home that sold in the four weeks ending August 16 was 3.7% larger (1,772 square feet) than the typical home that sold a year earlier. Compare that with 0.4%, the average year-over-year growth rate from 2015 to 2019. Growth in the size of homes people are buying has accelerated since the onset of the coronavirus outbreak. The typical home that went off the market during a similar time period last year (the four weeks ending August 11, 2019) was 1.7% bigger (1,713 square feet) than the year before.
And homebuyers are searching for larger homes. The average minimum square footage of Redfin.com users’ saved searches was 1,864 so far in August, up from 1,794 a year ago and up from 1,803 in January. The size of sought-out homes has been growing over the past five years, up from 1,685 in January 2016.
“People want bigger: Bigger houses, bigger properties. That’s what people are asking for, whether their idea of big is a half-acre, one acre, or 10 acres. If people are living in a small cookie-cutter home right now, they want a larger house with extra rooms and a dedicated place for an office.”
We delved into July housing market data to analyze whether homebuyer interest in additional space has translated to a hotter housing market for bigger homes. The answer? Yes—but only slightly.
Sales grew nearly 10 times faster for large homes than small homes sales were up 21.2% year over year nationwide for large homes in July, compared with 10% for medium-sized homes and 2.3% for small homes. For this analysis, we divided single-family homes across the country into three size tiers: Small (300-1,500 square feet), medium-sized (1,500-3,000 square feet) and large (3,000-5,000 square feet).
The National Association of Realtors reported pending home sales increased in July. The Northeast region increased by 6.2%. The report also provided some bad news as well.
First, the homeownership rate for young adults, 35 years old or younger, is at an all-time low for this decade. Second, what has helped fuel the housing market, low-interest rates, may come to an end in the near future as the Federal Reserve is likely to increase rates.
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Updated: Boston Real Estate Blog 2020