Less Room to Roam: Average Size of Home Lots in U.S. Is Shrinking

When Americans are hunting for a home, they give a lot of thought to the size of the lot. After all, a bigger lot means more space for a backyard patio or a kids’ playscape — and more lawn to mow.

“Many people like the idea of living in a single-family home and having a yard to call your own along with some space between themselves and their neighbors,” real estate website Trulia observes.

But when it comes to newly built single-family homes, the average lot size is dwindling almost as fast as the kids did in the classic 1989 movie “Honey, I Shrunk the Kids.” Today’s sequel could be “Honey, I Shrunk the Lots.”

Median Lot Size Dwindles

According to the U.S. Census Bureau, the median size of a lot for new construction in 2018 was 8,982 square feet, or about one-fifth of an acre. By comparison, the median size of a home lot in 2009 was 10,994 square feet, or one-fourth of an acre. That’s a square footage drop of 18.3 percent in average size.

Why are larger lots going away?  Is less land being carved out for new homes in America? It boils down to price and preference.

First, let’s look at price.

The National Association of Home Builders (NAHB) reports the average cost of a lot for a single-family home is $85,139.

For builders, this means a hefty investment in land. If you apply the average lot cost to the 154,000 lots that Pulte, one of the largest homebuilders in the U.S., controlled as of June 30, 2019, you’re looking at more than $13 billion. While this a ballpark approximation, it gives you an idea of how much money homebuilders spend on land.

Land costs keep rising in large part because of a shortage of affordable, buildable lots, NAHB says.

Land also plays a sizeable role in the homebuying experience. The lot makes up roughly one-fourth of the sale price of a single-family home, meaning a smaller lot can dramatically reduce how much someone pays for a new place to live.

Lot Size No Longer Matters as Much

Aside from price considerations, there’s been a shift in buyers’ preferences related to lot size, particularly among older Americans.

In a 2018 survey conducted by NAHB, 22 percent of homebuyers had no requirement for a minimum lot size, while 9 percent wanted at least one-eighth of an acre and 18 percent wanted at least one-fourth of an acre. In other words, size didn’t matter all that much for nearly half of all buyers.

Disinterest in size of a lot is even more pronounced among baby boomers and seniors. The association’s survey found that more than one-fourth of that collective group of older buyers had no threshold for minimum lot size. Paul Emrath, NAHB’s vice president for survey and housing policy research, says those folks might favor small lots because they’re “less enthusiastic about doing yard work.”

Digging deeper into the survey results, 40 percent of all buyers said they’d be willing to settle for a smaller lot in order to afford a new home. That’s up from 30 percent in NAHB’s 2003 survey.

That doesn’t mean, though, that homebuyers are necessarily sacrificing home size when they pick smaller lots.

Research published in 2017 by the Federal Reserve shows the median size of a single-family home built from 1980 to 2014 grew by 50 percent, but the median lot size decreased by more than 20 percent during the same period. In other words, builders are squeezing bigger homes onto smaller lots.

Big houses jammed on small lots
Bigger houses on smaller lots mean smaller lawns. Credit: Montgomery County Planning Commission, CC2.0

Homes Still Pricey

For builders, that translates into generating more revenue for bigger homes while trimming land costs for every dwelling unit.

“When home prices appreciate at a fast pace, the land value rises even faster, which, in turn, drives the cost of homes higher. In order to mitigate the high cost of the land value, homebuilders reduce the size of the lots to bring the cost of the new home down so they can price these homes at a reasonable level,” according to CoreLogic, a provider of property data and analytics.

Research published in 2017 by Trulia found that homes built since 2015 occupied 25 percent of the land where they were situated, while homes built in 1975 occupied just 14 percent. Why? It’s a combination of lot sizes dwindling by 36 percent and home sizes growing by 15 percent. The trend of smaller lots plus bigger houses means yard space is dwindling.

“We still want our big homes with ample bedrooms and bathrooms, but increasingly, we’re having to make a tradeoff to keep those kinds of homes accessible — namely, smaller lots,” Svenja Gudell, chief economist for real estate platform Zillow, said in 2015. “Americans want both space and convenience, but the land available relatively close to job centers is expensive. This trend of larger homes and smaller lots represents the compromise between what builders can profitably build and what consumers will actually buy.”

Main image credit: Wikimedia


John Egan

John Egan is the former editor in chief of LawnStarter.com. Now, he is a freelance writer extraordinaire. He lives in Austin, Texas.