Entry Level Homes Size Shrink

KB Home and Others Shrink Entry-Level Homes
Home builders are shrinking the size of new homes to lower costs and attract first-time buyers.

The median home size had risen from 1,500 square feet in 1970 to a high of 2,302 in 2007. By the first quarter of 2009, median home sizes had dropped slightly to 2,239, according to the National Association of Home Builders.

One of the builders aggressively shrinking designs has been KB Home. It attributes its 59 percent increase in orders of new homes since the beginning of 2009 to the new smaller designs it debuted at the end of 2008.

Its new energy-efficient Open Series home designs start at 961 square feet with a base price of $89,999.

KB is cutting costs by reducing the size of bathrooms and hallways and designing homes so bathrooms and kitchens can all share the same plumbing systems. Its innovative plans result in 40 percent more useful living space, the company boasts.

Other companies that are building small, energy efficient homes include DR Horton, whose models start at 900 square feet and $99,000.

Source: Business Week, Prashant Gopal (07/29/2009)