New construction homes are becoming smaller than they’ve been in years, the Washington Post reported, as a result of affordability challenges for buyers and builders alike.
The trend is a departure from the early pandemic trend of building larger homes.
In the past year, the median size of a new home has fallen 4 percent, according to data from the U.S. Census Bureau. The median size of a new home is down to 2,179 square feet, the smallest footprint in the category in 13 years.
Townhouses are growing in popularity too, as their dearth of windows, doors and general width is more financially feasible for builders. At the end of last year, one in five new homes under construction were townhouses, according to the National Association of Home Builders.
“Even a slightly smaller home can be thousands of dollars cheaper — for both builders and buyers,” said Andy Winkler, director of housing and infrastructure at the Bipartisan Policy Center, told the Post.
Affordability has been an acute challenge for buyers for years, as home prices surged and record-low mortgage rates from the early pandemic days did the same. The median home price has risen 28 percent in the past four years to nearly $418,000.
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Prices for entry-level homes have become more daunting for buyers, too. Last year, the median price for a starter home was $243,000, according to Redfin, a record-high level. Starter home prices are up 2 percent year-over-year and 45 percent from 2019.
In response to affordability challenges, major homebuilders are shifting priorities away from the big ticket homes and towards the cheaper set. Most of D.R. Horton’s homes last year cost buyers less than $400,000, as a 900-square-foot home became a more standardized option. Toll Brothers more than doubled its sales of its “affordable luxury” homes from 2022 to 2023.