Share of New Homes With 4 or More Bedrooms Jumped in 2020
via Eye on Housing
The U.S. Census Bureau Survey of Construction’s (SOC) 2020 estimates of the shares of the number of bedrooms in new single-family homes showed a sharp upswing in the percentage of new homes started with 4 or more bedrooms, unlike in prior recent years. The most recent SOC data show the shares in the varying number of bedrooms in new homes whose construction began in 2020 (new homes started).
Nationally, the share of single-family homes started with 4 bedrooms or more increased from 42.6 percent in 2019 to 45.2 percent in 2020. These developments are linked to changes in the makeup of homebuyers from the previous years. In 2020, the detrimental economic effects of the COVID-19 pandemic, a low-interest rate environment in the U.S., and low housing supply together drove prices up, leaving some prospective first-time homebuyers out of the market. Successful buyers were generally looking for more space.
Examination of housing finance data in the previous year, i.e., the Mortgage Bankers Association’s (MBA) Weekly Application Surveys in 2020, shows increases in the average loan size of all purchase mortgages despite low housing inventory, another sign that the market was challenging for prospective first-time homebuyers. The 2020 SOC reduced share of new homes started with 2 bedrooms or less (9.7 percent vs 10.5 percent the previous year) corroborates the lowered presence of first-time homebuyers in the new home market that year.
Apart from the East North Central Census Division, the above chart shows no variation by geography in changes of the shares of new homes started in 2020 with 4 or more bedrooms. While the East North Central Census Division experienced a decline in this share from 2019 by 2.6 percent to 29.8 percent, the other divisions show only increases in the shares.
Unsurprisingly, the 2020 survey, as in prior years, also shows that new homes started with lower square footage area had fewer bedrooms built. For example, in homes less than 1,200 square feet, 83 percent had two bedrooms or less and the remaining homes were all 3-bedrooms. Similarly, in the next tier of home size, 1,200 to 1,599 square feet, 31 percent of all new homes started had 2 bedrooms or less, 67 percent had three bedrooms, and the remaining percentage was taken by homes with 4 bedrooms.
Finally, the SOC shows that homes built-for-rent are also less likely to have more bedrooms: 87% of single-family homes whose construction began in 2020 with the intent of ultimately renting (a niche market in and of itself) had 3 bedrooms or fewer.