Marcus & Millichap’s latest Research Brief notes an increased builder interest in entry-level housing.

According to Marcus & Millichap’s newest Research Brief on the housing sectors, many home builders are shifting their demographic focus away from the upscale sector, which had remained strong in the immediate post-recession, in order to satisfy the pent-up demand for smaller, less-expensive homes from first-time buyers.

The report points out, while the size of newly completed homes is shrinking, sales volume in the lower price segment has grown. Marcus reports that the median size of a new single-family home shrunk by 70 square feet in Q2, “while sales of new homes in the $200,000 range strengthened.”

While Globest’s John Salustri points out that new focus may have an impact on the rental market, which has been the primary housing option for those priced out of the housing market, Marcus & Millichap does not expect any significant rental drop in the short term. “Through the remainder of the year and into 2017,” they say, “newly formed households will continue to favor rentals, sustaining steady demand for the record number of apartments scheduled for delivery in 2016.”

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