New research confirms what the housing industry has suspected for quite a while: Homes being built these days are getting smaller. According to the U.S. Census Bureau, the average size of homes started in the third quarter of 2008 was 2,438 square feet, down from 2,629 square feet in the second quarter.

The median size of homes started in the third quarter was 2,090, down from 2,291. At this year’s International Builders’ Show in Las Vegas, economic researcher for the NAHB, Gopal Ahluwalia, spoke about the trend saying the organization had heard smaller homes were being constructed but, “we never had data to back it up.”

Gayle Butler, editor-in-chief of Better Homes and Gardens, calls it “right-sizing” ― giving up big homes with unused space and buying a home that better fits their needs. This is occurring either by necessity or choice as homeowners move away from super-sizing their homes. An online survey of more than 700 potential new-home buyers conducted by the magazine reported that 32 percent expect their new home to be somewhat smaller or much smaller than the one they currently live in.

January research from NAHB shows 88 percent of builders are building or plan to build a larger share of smaller homes; 89 percent said they're planning on building more lower-priced models. Other “practical living” consumer home trends include:
  • Outdoor kitchens and entertaining areas continue to rise in popularity.
  • High ceilings in main living areas are becoming less important.
  • Fewer fireplaces in new homes.
  • Nearly 90 percent of those who participated in the Better Homes and Gardens survey plan to install energy-efficient heating and cooling systems in their next home; 31 percent plan to have geothermal heat.
  • Freezer sales have climbed, as homeowners shop in bulk or on-sale and freeze what they won’t use right away.