As housing prices soar across the country, the average size of new homes is declining, industry experts have found.
With first-time homeowners facing costs that have increased an estimated 72% between February 2020 and May 2023, many Americans are opting for smaller, more cost-efficient floor plans, according to The Wall Street Journal.
A study by Livabl, a new-home listings website by Zonda, found that since 2018, the average new home size has shrunk by 10% nationwide to around 2,420 square feet.
Simultaneously, Zillow logged a 9.5% year-over-year increase in the construction of homes with fewer than three bedrooms in 2022, while the construction of homes with three bedrooms or more fell by 13.1%.
The downsizing trend was more pronounced in markets with high demand, such as in the Seattle metro area, where the size of newly built homes shrank by 18% in five years.
Despite southern cities offering some of the largest lots and home sizes in the country, new homes in Charlotte and San Antonio shrank by 14%, according to Livabl.
Between 1980 and 2018, the median size of new homes nationwide grew by 150%, peaking in 2015 at 2,467 square feet.
Homebuilders and architects have picked up on the recent downsizing trend. They are increasingly proposing designs with more efficient living spaces, often cutting out separated dining and living rooms, spare bathrooms, and loft spaces. Shared and multi-use rooms are given priority, such as jack-and-jill bathrooms or kitchens with large islands for eating space.
Even apartment developers have begun developing micro-apartments, as previously covered by The Dallas Express. One such community is in the works in Old East Dallas, with apartments ranging from 350 to 783 square feet.
For Clint Mitchell, chief executive at Indianapolis-based Estridge Homes, the demand for minimalist homes has been highest among entry-level buyers and empty-nesters.
To meet client needs, Estridge has been delivering detached home concepts that are between 300 and 500 square feet smaller and $50,000 to $75,000 cheaper than their standard offerings.
As Sonia Mendez, a real estate agent in Lexington, South Carolina, explained to the WSJ, there has been an uptick in new builds of townhomes between 1,500 and 1,700 square feet.
“They are being bought just as fast as the single-family home,” said Mendez. “The first-time home buyers are excited. They don’t see a small home. They see it as a dream come true.”
A trickle-down effect has been seen in related industries, with landscapers tasked with creating privacy hedges among increasingly dense neighborhoods with limited acreage and furniture companies making design adjustments.
For instance, Carol Glaser, executive vice president of merchandising at Bob’s Discount Furniture, has noticed a growing demand for furniture performing multiple functions.
“If [customers] are in smaller homes, they need their furniture to work harder,” Glaser told the WSJ.
Multipurpose items include kitchen islands with storage and wine racks, sleeper sofas, and compact dining tables.
Yet even with these cost-saving measures, today’s buyers are still paying more per square foot.
“There are two housing markets today. Sales in the existing-home market are slow because of a lack of supply and high prices,” explained Ali Wolf, Zonda’s chief economist, per Livabl. “In the new-home market, homes are unused, which helps justify the price, and builders are offering incentives to help with today’s housing affordability challenges.”
In Dallas-Fort Worth, the median price of a newly built single-family home dropped below that of an existing home in June, with a difference of about $12,000, as previously reported by The Dallas Express.
This is partly due to existing homeowners locked in advantageous mortgage rates delaying the sale of their homes, resulting in a tightening of housing inventories.
For its part, Dallas has one of the worst housing shortages in the United States, according to a recent analysis by the Bank of America Institute.
As previously reported by The Dallas Express, developers have dealt with long permit wait times and other inefficiencies at the City’s Development Services Department, which has likely discouraged some from moving forward with projects.
