The majority of home buyers interested in building a new, single-family home or new, custom home remain 2nd, 3rd, and fully custom home buyers.  The re-entry of the 1st time home buyer to the real estate market has not yet begin post-Recession. While the housing market has been recovering on a slow and steady pace since 2012 when house pricing started to really climb, it has not recovered enough to allow qualification of credit for first-time home buyers.  The number of approved FHA loans – loans typically offered to 1st time home buyers – has remained stagnant for many quarters in a row.  Even with the lowering of the down payment cost from $5,000 to $3,000, there has not been a great surge of first-time home buyers into the housing market.

Because of these statistics, the average size of a new, single-family home has remained above average compared to the years just before the Recession.  Historically, it is typical for home buyers with more security, fewer credit problems, and a larger investment to be able to build and afford “more home,” so the larger square footage of homes is not unexpected coming out of the Recession.  However, for the 2nd quarter of 2015, the median square footage of new homes built dropped slightly and then remained the same for the 3rd quarter.  During the 2nd quarter of 2015, the living square footage of new, single-family homes dropped from 2,478 to 2,445.  Total square footage dropped from 2,704 to 2,653.

Historically, total square footage during the 2nd quarter of 2015 was up by 13%, and the living square footage amount was up by 17%.  The cost of building these square footages is on-average – $468,318 for a new home built on 1/2 acre of land.  Of that cost, 61.8% was construction costs, lot cost was 18.2%, builder profit was 9%, and overhead was 5.6%.  The remaining percentage of the cost to build and buy a new home included Realtor commission, financing and marketing.  These costs are not dissimilar from 2013’s numbers, so the percentage breakdown of the cost of building a new home have not changed much in the last two years.

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