People in the market for a new home will consider a number of factors when perusing properties, including whether the home is large enough to meet their needs. But according to a new analysis by the financial guidance site NerdWallet, small homes will often appreciate in value faster than large ones.

Daniel Tonkovich and Emily Starbuck Crone, summarizing the report for NerdWallet, say the analysis looked at three years of sales data from Realtor.com, which is associated with the National Association of Realtors. The report focused on 20 of the largest metropolitan areas in the United States, although Philadelphia and New York City were excluded due to insufficient data.

All properties were divided into four groups based on square footage. These quartiles were defined as the smallest 25 percent of homes in the market, a "mid-small" range covering the next quartile, a "mid-large" range for the next quartile, and the largest 25 percent of homes. The analysis then calculated the compound annual growth of the listing prices in these segments.

Home sizes varied considerably by market. The quartile for the smallest 25 percent of properties ranged from 1,152 square feet or less for the Detroit-Warren-Dearborn market in Michigan to 2,324 square feet or less for the Denver-Aurora Lakewood market in Colorado. The quartile for the largest 25 percent of properties was 2,562 square feet and up in Ohio's Cleveland-Elyria market, and went up to 4,804 square feet or more in Denver-Aurora-Lakewood.

Market trends also varied among the markets, but the smallest quartile of homes experienced the fastest price growth in 17 of the 20 markets. Between 2013 and 2016, the median annual growth rate for the smallest 25 percent of homes in the markets was 8.9 percent. The next smallest quartile had the second fastest median annual growth rate at 7.4 percent.

Small home price appreciation was most likely to outpace larger homes in Florida. The smallest quartile of homes in the Miami-Fort Lauderdale-West Palm Beach market typically appreciated by 19.5 percent each year between 2013 and 2016. The second fastest appreciation among the smallest quartile occurred in the Tampa-St. Petersburg-Clearwater market, which typically had an annual growth of 16.6 percent.

The trend was reversed in St. Louis, where small home prices had the lowest level of appreciation among all metro areas. The smallest 25 percent of homes, which had 1,239 square feet or less, had an annual growth rate of only 0.8 percent between 2013 and 2016. The largest homes—above 2,580 square feet—had an annual growth rate of 6.7 percent, the highest among all metro areas in the report.

In 15 of the markets, the largest homes experienced the slowest price appreciation. The homes in the quartile with the largest square footage had a median annual price appreciation of 4.2 percent.

However, the greater value of the larger homes also meant that dollar amount of the appreciation was higher than homes with a smaller footprint. The largest quartile had an average appreciation of $99,790 between 2013 and 2016, compared with the average appreciation of $57,535 in the smallest quartile during the same period.

Tonkovich and Crone, citing Richard K. Green of the Lusk Center for Real Estate at the University of Southern California, said the favorable return on investment among smaller homes may be a result of a higher demand for homes located in the central areas of large cities. These properties tend to be smaller than homes found in the suburbs or rural areas.

In addition, people who bought a home between 2004 and 2006 have often decided to stay put since they have not recovered enough of the value lost during the housing crisis. This trend, coupled with a drop in new construction in the past decade, has made smaller "starter homes" more scarce and increased demand for them, leading to greater price appreciation.