The Housing and Urban Development Department has revised its minimum standards for one- and two-family houses, a move it hopes will result in smaller -- and cheaper -- structures. Milt Smithman, vice president of the National Association of Home Builders, called the change "a good move," but said it is too early to assess any impact it may have on prices.

The requirements, known as the minimum property standards (MPS) for one- and two-family dwellings, are design and construction criteria used to determine if new houses can qualify for HUD/FHA mortgage insurance and other HUD programs. HUD said it has retained standards that affect health and safety or are required by Congress.

However, other standards that were designed to keep HUD from issuing mortgages on houses that would be hard to resell, were dropped. "We've come to the conclusion that we don't need them," said Richard Atwell, chief of minimum property standards for the agency. "We're going to let the open market decide that. Builders will build what is marketable." Examples of provisions deleted include minimum room sizes (except for kitchens), lighting requirements and dimensions of stairways, doors, halls and ceilings. HUD said the MPS have been cut from 440 to 297 pages.

HUD is also in the midst of preparing a proposed rule that would allow a locality to replace the MPS with its local building code if it is comparable. "That would be great. That would be the ultimate," Smithman, of the home builders' group, said.