Secret #5 – The Home Ownership Boom After World War 2 was Due, in Part, to New Houses Becoming a Lot Smaller

U.S. Average New Single-Family House

• 1940 = 1,177 square feet

• 1950 = 983 square feet

After the war, the size of new houses came down a lot, in part, due to the FHA giving preferences to lower-priced houses at that time. In 1948, FHA mortgages on new houses changed from a maximum of 25 years long to 30 years long but only on mortgages up to $6,000. At the same time, FHA lowered the minimum down payment from 10% to 5% but only on mortgages up to $6,000. Larger FHA mortgages on new houses required larger down payment percentages and 25-year mortgages.

The median value of single-family houses in 1950 was $7,354 so a 20% down payment would be $1,471, or about $19,000 in today's money.

Since the 1950 census new houses have trended larger and in 2022 the size of the average new house was 2.6 times the size in 1950. The red line below shows the actual new house size and the dotted line shows the general trend from 1950. And, of course, the average household has a lot fewer people in it today than in 1950. 

U.S. Average New Single-Family House

• 2022 = 2,509 square feet

The FHA in 2024 will insure mortgages up to $498,257 and, in some places, up to $1,149,825.