Absolutely true! Affordability remains a challenge in the real estate market. If you're in the market to purchase a home, you might have to consider smaller properties to stay within your budget. The good news is that builders are currently prioritizing the construction of these compact homes and are providing attractive incentives. This trend can expand your choices for finding a home that meets both your needs and your financial constraints.

Newly Built Homes Are Trending Smaller

During the pandemic, homebuyers were looking for and could afford larger homes, and builders met that demand by prioritizing spacious properties. The emphasis was on accommodating home offices, home gyms, bonus rooms for virtual schooling, and other needs that require extra space.

With the affordability challenges that buyers are grappling with nowadays, builders are focusing more on introducing smaller single-family homes to the market. The graph provided utilizes data from the Census to illustrate the progression of this trend in recent years.

Builders are simply responding to market demand. When mortgage rates increased and affordability became a concern, the need for more affordable housing became apparent. The National Association of Home Builders (NAHB) elaborates on this shift in focus.

““After a brief increase during the post-covid building boom, home size is trending lower and will likely continue to do so as housing affordability remains constrained.”
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— National Association of Home Builders (NAHB)

A recent article in the Real Deal mentions how this benefits buyers.

““Even a slightly smaller home can be thousands of dollars cheaper — for both builders and buyers. . . In response to affordability challenges, major homebuilders are shifting priorities away from the big ticket homes and towards the cheaper set.”
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— Real Deal

What This Means for You

If you're struggling to find something within your budget, it might be worth checking out smaller homes. Also, if you explore new construction homes, you might discover some additional perks that could make them more affordable, such as discounts on prices or assistance with lowering mortgage rates. According to NAHB:

““More than one-third of builders cut home prices in 2023. NAHB expects builders to continue offering smaller homes and more affordable designs as housing affordability remains a barrier to homeownership.”
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— National Association of Home Builders (NAHB)

As per Charlie Bilello, Chief Market Strategist at Creative Planning, here's the explanation:

““Homebuilders are adapting to the lowest affordability on record by building smaller homes and offering more incentives/price cuts. The median square footage of a new single-family home in the US has moved down to its lowest level since 2010.”
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— Charlie Bilello, Chief Market Strategist, at Creative Planning

If you decide to check out these choices, you'll receive all-new appliances, experience a home with reduced maintenance requirements, and access some of the most current features out there. Sound intriguing, doesn't it?

Bottom Line

If you're considering purchasing a home in the near future, connecting with builders who construct smaller homes could provide you with more budget-friendly choices when you might need them most. Let's touch base to explore the available options in our area.