A shift in speculatively built (or spec) home building toward smaller lots continued despite the pandemic-triggered suburban flight and presumed shifts in preferences toward more spacious living. The steadily rising share of smaller lots reflects unprecedented lot shortages confronted by home builders during the pandemic housing boom, as well as their attempts to make new homes more affordable.
Close to two thirds (65%) of new single-family detached homes sold in 2023 were built on lots under 9,000 square feet, which is less than one-fifth of an acre. According to the latest Survey of Construction (SOC).
The share of lots smaller than 7,000 square feet (or 0.16 of an acre) reached 40% in 2023 — another record reading. Only 28% of new single-family detached spec homes were built on lots that size in 1999.
A persistent shift towards smaller lots, however, is a more recent phenomenon. The share of lots under one-fifth of an acre was fluctuating around 48% until 2011. It was only during the last decade that the share rose rapidly, from 50% in 2011 to 61% right before the pandemic and gained an additional 4 percentage points during the last four years.
In 2010, 27% of all sold single-family detached homes occupied lots under 0.16 acres, and an additional 20% were on lots between 0.16 and 0.25 acres. Fast forward to 2023, these shares increased to 40% and 25%, respectively.
For the regional analysis, the median lot size is chosen over average since averages tend to be heavily influenced by extreme outliers.
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