As the nation’s housing stock ages and new homes remain out of reach for many buyers, remodeling is capturing a growing share of the residential construction market.
The value of a single-family home is shaped by many factors, but its physical features remain among one of the most influential. Using the latest 2023 American Housing Survey (AHS), this study focuses on which home features genuinely boost single-family detached home values and by how much. Key findings show that the overall square footage of the home and the number of bathrooms stand out as especially strong value drivers, while other features such as the number of bedrooms and the presence of amenities also play a role. In this first part of our two-part blog series, we focus on the physical features of single-family homes. The second part will explore how location and neighborhood quality further influence home values across the United States. Home size is one of the strongest value drivers in today’s housing market, as shown in Figure 1. Compared with smaller homes under 1,000 sq. ft., homes between 1,000 and 2,000 sq. ft. are valued about 17% higher. Moving up to homes between 2,000-3,000 sq. ft. increases value by around 30%, while homes with 3,000 sq. ft. or more adds 55% more to the market value. These effects are measured after accounting for differences in region, age of structure, and other key features. While both the number of bathrooms and bedrooms contribute to single-family home values, the number of bathrooms has a larger impact. Each additional full bathroom increases home value by approximately 32%, compared to about 5% for an additional bedroom, holding the square footage and other features constant. Even a half bathroom brings meaningful returns, adding an estimated 15%. The age of the home is also a contributing factor to the final market value, even after accounting for other features and neighborhood conditions. Compared to homes built before 2010, homes built between 2010 and 2019 have 13% higher values, and homes built after 2020 are valued 19% higher. These premiums likely reflect improvements in energy efficiency, insulation, and modern building systems that are appealing to more buyers. Other amenities also bring solid returns, like garages, fireplaces, and centralized air conditioning. Garages add around 10% to home value; Besides a protected parking space, garages offer the flexibility for additional storage or turning it into a workshop/hobby space. Having a fireplace can add value to a home, increasing its value by around 10%. It is appealing to some home buyers, as it not only provides a cozy ambiance, but also could reduce heating costs in some regions. Centralized AC adds about 7% to home value nationwide, but its impact varies across the divisions. In the South, including the South Atlantic, East South Central, and West South divisions, centralized AC adds 23%, 40%, and 48% more values, respectively. Please click here to be redirected to the full special study.
Robert L. “Bob” Mitchell, 2000 NAHB president, passed away on Wednesday, Nov. 12.
Exhibitors at the NAHB International Builders’ Show® (IBS) have an opportunity to spotlight their innovative new products each year through the Best of IBS Awards. Don't miss your chance - apply by Friday, Nov. 21.
NAHB leadership, including committee and council members, will gather Nov. 17-19 for the 2025 Fall Leadership Meeting in Denver.
Credit conditions on loans for residential Land Acquisition, Development & Construction (AD&C) were still tightening in the third quarter of 2025, according to NAHB’s quarterly survey on AD&C Financing. The net easing index derived from the survey posted a reading of -11.0 (the negative number indicating that credit tightened since the previous quarter). This is in reasonably close agreement with the third quarter reading of -6.6 for the similar net easing index produced from the Federal Reserve’s survey of senior loan officers—marking fifteen consecutive quarters of tightening credit conditions reported by both builders and lenders. More details from the Fed’s survey of lenders—including measures of demand and net easing for residential mortgages—appeared in a previous post. According to the NAHB survey, the most common way lenders tightened in the third quarter was by lowering the maximum allowable loan-to-value or loan-to-cost ratio on the loans (cited by 60% of the builders and developers who reported tighter credit). Tied for second place were reducing the amount they are willing to lend, requiring out-of-pocket payment of interest or borrower funding of an interest reserve, and requiring personal guarantees (cited by 47% each). Results on the cost of credit in the third quarter were mixed. The average contract rate increased from 7.82% to 7.95% on loans specifically for residential land acquisition—but declined on the other three categories of loans tracked in NAHB’s AD&C survey: from 8.04% to 7.68% on loans for land development, from 8.17% to 7.90% on loans for speculative single-family construction, and from 7.95% to 7.90% on loans for pre-sold single-family construction. Meanwhile, the average initial points charged on the loans increased across the board: from 0.56% to 0.66% on loans for land acquisition, from 0.74% to 0.83% on loans for land development, from 0.72% to 0.74% on loans for speculative single-family construction, and from 0.58% to 0.67% on loans for pre-sold single-family construction. Those combinations of quarter-to-quarter changes caused the effective interest rate (which takes both the contract rate and initial points into account) to increase from 9.95% to 10.15% on loans for land acquisition, but to decline from 11.77% to 10.92% on loans for land development and from 12.82% to 12.04% on loans for speculative single-family construction. The average effective rate on loans for pre-sold single-family construction remained essentially unchanged at 12.74%, compared to 12.73% in the second quarter. Although results on the average effective interest rate were mixed on a quarter-to-quarter basis, the rate on each of the four types of AD&C loans has declined significantly since peaking somewhere in the period between 2023 Q3 and 2024 Q2. Also in the NAHB AD&C survey, 37% of respondents who built single-family homes during the third quarter of 2025 reported financing some of the construction with a construction-to-permanent (one-time-close) loan made to the ultimate home buyer. On average, 63% of the homes these respondents built were financed this way. More detail on credit conditions for residential builders and developers is available on NAHB’s AD&C Financing Survey web page.
In a major victory in the long legal battle over New York’s statewide gas ban for new homes, NAHB and the New York State Builders Association (NYSBA) have secured a suspension of the new regulations while the case works through the appeals process.
The competition concludes on Nov. 30 with several International Builders' Show prizes on the line.
On Nov. 12, Congress passed a short-term continuing resolution to reopen the government after the longest shutdown in history. The resolution, which President Trump signed late that evening, funds the government through Jan. 30, 2026.
Lending standards for most types of residential mortgages were essentially unchanged, according to the recent release of the Senior Loan Officer Opinion Survey (SLOOS). For commercial real estate (CRE) loans, lending standards for construction & development were modestly tighter, while multifamily was essentially unchanged. Demand for both CRE categories was essentially unchanged for the quarter. Two weeks ago, the Federal Reserve eased its key short-term interest rate (i.e., Federal Funds) by 25 basis points for the second consecutive meeting, establishing an upper bound of 4.00%. While the causal link between the Federal Funds rate and the 30-year fixed rate mortgage is minimal, these cuts will have a more tangible impact for private home builders through lower rates on acquisition, development, & construction (AD&C) loans. Roughly 60% of single-family starts are built by private builders. With pressure from both sides of their dual mandate as the job market cools and inflation remains sticky, NAHB is forecasting a measured approach from the Fed when it comes to further rate cuts next year. Residential Mortgages In the third quarter of 2025, four of seven residential mortgage loan categories saw a positive net easing index for lending conditions with an additional two recording a neutral reading (i.e., 0). Only subprime loans experienced tighter lending conditions, as evidenced by a negative value (-6.3). Nevertheless, based on the Federal Reserve classification of any reading between -5.0 and +5.0 as “essentially unchanged,” all but subprime fell within this range. Five of the seven residential mortgage loan categories reported stronger demand in the third quarter of 2025, with the strongest demand coming from Government, GSE-eligible, and Qualified Mortgage (QM) non-jumbo, non-GSE eligible loans. Non-QM jumbo was essentially unchanged for the quarter, while subprime loans were the only category to experience weaker demand, which has been the case since Q3 of 2020. Commercial Real Estate (CRE) Loans For the CRE loan categories, construction & development loans registered a net easing index of -6.6 for the third quarter of 2025, indicating modestly tighter credit conditions. For multifamily loans, the net easing index was -1.6, or essentially unchanged. Both categories of CRE loans show tightening of lending conditions (i.e., net easing indexes below zero) since Q2 2022. However, the tightening has become less defined recently for multifamily, with its net easing index essentially unchanged (i.e., between -5.0 and +5.0) for four consecutive quarters. The net percentage of banks reporting stronger demand was -4.9% for construction & development loans, with a negative number indicating weaker demand. For multifamily, demand was neutral (i.e., 0) in the third quarter of 2025, with the same number of banks that reported weaker demand as those who reported stronger demand. However, demand for CRE loans within both categories has experienced unchanged conditions (i.e., between -5.0% and +5.0%).