Compact housing: better living in smaller spaces

''Smaller is smarter.'' That's the upbeat argument builders will use as they emphasize the affordability, functionability, and energy efficiency of this year's new down-scaled housing.

At the recent National Association of Home Builders meeting here, president Fred Napolitan predicted a 30 percent increase in new-home sales this year. He also predicted that production would shift to smaller, more affordable units, such as townhouse and condominium units built on less land and geared more to singles, young marrieds, and older Americans whose children have left home.

Prospective buyers will be hearing phrases like ''better living in smaller space'' and ''making more out of less'' as they tour new housing.

According to Gene Dreyfus, president of Childs-Dreyfus Group in Chicago, ''Builders and developers from coast to coast are constructing townhouse and zero-lot-line projects lower than $60,000, and single-family homes from $90,000. A few of these will be as small as 550 square feet; most will range from 800 to 1,500 square feet. The over-2,000-square-foot house that most of us were raised in would cost from $200,000 to $300,000 to build in today's market - thus the trend to more compact housing.''

For 17 years Jack Childs and Gene Dreyfus have been working with builders and their architects and landscape artists to help create model living units to fit specific life styles and age and income levels. Now they are turning their talents to making limited space look convincingly larger and as manageable and homelike as larger living units.

''We have an educational job to do,'' Mr. Dreyfus says, ''in showing how attractive such smaller sizes can actually look, and in teaching people how to properly furnish and decorate their reduced square footage.''

A prime example of their approach is evident in the new minimal-size townhouse condominiums just built by the Friendswood Corporation in a Houston suburb. Architecturally, the space in each unit is divided in completely different and innovative ways, giving dramatic high-vaulted ceilings to downstairs living areas, using open staircases, and producing bannistered bridges, balconies, and loft areas to serve as nooks for a multitude of needs, including guest quarters.

Mr. Childs, the interior designer of the team, shares these ideas for living in pared-down space:

* Remove conventional room titles from your thinking. Think of every room as multifunctional, and make it perform in a variety of ways. A dining area, for instance, can also be thought of as a home office, a library, a place for games and hobbies. A living room can include an entertainment center and a more secluded study area. Second bedrooms can be converted into dens or home offices or function as extra dining areas - and, with a convertible sofa, accommodate an occasional visitor.

* Make every inch of space count through the generous use of built-in features, including cushioned, built-in window seats. Use floor-to-ceiling built-in bookcases throughout the living area, and build storage drawers into bedrooms and bathrooms.

* Make scale your first concern when buying furniture for small rooms. Take floor plans with you on all shopping expeditions, so you will have exact measurements at hand. Remember that the size and height of the space should dictate the scale of the furniture. Smaller spaces should be furnished with pieces of compatible scale, not overwhelmed with massive furniture that is simply too big.

* Mr. Childs suggests neutral-tone sofas, preferably 32'' deep with a low back and arm, exposed legs on occasional chairs; and low storage cabinets and dressers in the bedrooms. He suggests that dining and occasional tables have glass or mirror tops in order to give the illusion of less bulk, and that shelves or storage pieces be attached to the wall when possible in order to leave visual floor and wall space beneath them.

* In using color, his chief guideline is that furniture, floors, and walls be in a neutral color and blend. Strong colors or large patterns, he feels, should be used only in toss pillows and other accessories. Use miniprints instead of large-scale prints, especially on large sofa or bed areas.

* Try to individualize backgrounds and furniture with the use of different textures rather than an array of colors. In small rooms the eye should be able to travel freely over the floor, over the bulkiest pieces of furniture, and up the wall without being stopped by a large sofa or lounge chair outlined by its jolting color. If possible, use one color of carpeting throughout a small house.

* Window treatments should be simple and expose as much glass and let in as much light as possible. Lots of daylight is a great space expander in tight quarters. Avoid heavy drapery and extravagant use of fabric; they take anywhere from four to six inches out of the space of a room. Set window treatments, when possible, into the window casing itself, so they will not protrude into the room. Thin slatted blinds are one good answer.

* In a small space, people should not be aware of the light source. Lots of little lamps sitting around are not the solution. Fat, bulky lamps aren't either. Very slim, metallic pharmacy-type floor lamps are ideal, as is ceiling track lighting, which takes up no space at all.

* Mirrors help enormously, but you don't have to mirror whole walls. Use architectural mirror in strategic spots where they can reflect some of outdoor views or bounce light around the room to make it brighter. Well-placed strips of floor-to-ceiling mirror can do this. Or, instead of hanging the usual framed mirror over the dresser, try the room-opening effect of a mirror wall panel that stretches from the top of the dresser to the ceiling. The room will suddenly grow.

* Relate indoor and outdoor spaces so they appear to flow together and to be correlated. An attractively furnished and landscaped balcony or patio, viewed through sliding glass doors, can effectively extend any indoor living area. But be sure, Mr. Childs says, to also furnish such outdoor areas with a sense of activity - gardening or barbecuing, perhaps - so they do not appear to be unused , unloved, or generally glum. Also use live plants indoors to soften space and give a feeling of dimension and life to a room.

* If space is really tight, panel kitchen cabinets to match other walls, and use a slide-out dining table that can be pulled out like a shelf and slid away again when not in use.

* Remember that living in smaller space will require more discipline and more tidiness, but that everything necessary to good living can come in small packages, including privacy, plenty of storage, and touches of beauty.