Builders Starting to Downsize Product

Builders have seen the light, according to the latest NAHB's Builders' Economic Council survey. Nearly nine out of ten who started houses in the fourth quarter of 2008 are switching to smaller units with a lower price. Only 12% reported building larger, more expensive houses. The latest Census Bureau figures confirm what the builders are saying. While the average square footage of houses completed during the third quarter was on the upswing, the average size of those started in the quarter is going down. And the change is "significant," according to Gopal Aluhwalia, head of NAHB research. The average square footage in newly started single-family houses was 2,629 in the second quarter vs. 2,438 in the third quarter, a difference of nearly 200 square feet, or an amount equal to a good-sized bedroom. Until the third quarter, the size of houses had been creeping up almost steadily.