New Housing Mix: Are You In or Out of the Big Picture?

The turmoil of the mid-2000’s housing market bust and Great Recession set major changes in motion for the new home market. In fact, even now we’re still trying to sort out whether it will return to its old, familiar pattern or if we’re seeing the “new normal.”

Beginning with a freefall in annual number of housing starts – a cataclysmic 75% decline – the market bust and recession led to a new mix of new housing type and price-point categories that diverged sharply from the traditional pattern. The graph below shows the historic new home mix based on our Annual Builder Practices Survey data.

Source: Home Innovation's Annual Builder Practices Survey

Keeping an eye on housing mix is important to the market success of building materials manufacturers, both in quantity and type of materials that home builders buy. In the past few years, a more stable pattern in housing mix has emerged, and Apartments and Condos seem to be poised to represent the largest of the five primary housing types and price-points, followed by Single-Family Move-Up homes, which had been the traditional housing market leader.

Home Innovation’s 2018 Builder Practices Survey revealed many new trends (and trend reversals). The change in housing mix had largely predictable effects, but some were surprising. Each of the four single-family house types—townhouse, starter, move-up, and luxury—fell in average size from 2016 to 2017 despite an overall increase in home selling price during this time period. The fall in average Luxury home size was most dramatic—from about 3,900 to 3,600 square feet in a single year. The primary influence in this change is likely generational—i.e., Millennials now represent the largest homebuying generation and have shown a preference for smaller homes.

Per the latest Builder Practices Survey data, materials that saw the greatest gains were modestly-priced items that can be described as having simpler, more modern or urban designs. For example, the survey findings show…

• Kitchen cabinets saw growth in the popularity of flat panel doors, painted or laminate finishes, and euro-styled frameless boxes.
• Granite saw its biggest drop, and Quartz its biggest increase, as a new home kitchen countertop material.
• LVT flooring is gaining some traction in new homes, particularly in new Multifamily units.
• Traditional full-thickness hardwood flooring saw a sharp decline and engineered wood flooring a corresponding increase.
• Vinyl windows, vinyl patio doors, and vinyl siding all saw an increase in share of new home installations.
• Both stainless steel cable and glass panel porch and deck railings are gaining popularity.
• Some traditional, high-end exterior wall materials—including stone and brick—saw declines.

Over the next couple of weeks, the Home Innovation team will be digging a little deeper into the Builder Practices Survey findings that we’ve just begun to analyze. They will no doubt shed more light on trends in our ever-evolving industry. Stay tuned!

Home Innovation publishes Builder Practices Reports on more than 40 building products categories.

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If you’d like more detailed information on any of our reports or our survey methodology, contact Ed Hudson, our director of market research, directly. He’d be happy to discuss how we can help you keep apprised of building industry trends and opportunities using our Builder Practices Reports.

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