As the housing industry celebrates New Homes Month in April, builders are responding to buyer preferences by constructing smaller homes to make homeownership more accessible for families planning to buy a home this year. A National Association of Home Builders (NAHB) analysis found that new homes built in 2023 reached their smallest median size in 13 years.

“Homeownership remains a goal for families who are eager to put down roots and have a place to call their own,” said NAHB Chairman Carl Harris, a custom home builder from Wichita, Kan. “Our nation’s builders are meeting the moment by finding solutions in home construction to allow for more individuals to purchase a home.”

A Shift Toward Smaller Homes

More than a third (38%) of builders reported building smaller homes in 2023, and over a quarter (26%) plan to construct even smaller homes this year, according to NAHB. The latest “What Home Buyers Really Want” study by NAHB reveals a significant downward shift in buyer preferences for home size over the past 20 years. In 2003, the typical buyer desired a home of 2,260 square feet; today, that number has decreased to 2,067 square feet.

Data from the U.S. Census Bureau confirms this trend, showing that new homes have been shrinking for nearly a decade. The average (median) size of new homes built in 2023 fell to 2,411 (2,179) square feet, the smallest since 2010. This drop continues a downward trend that began in 2015, with the only exception being 2021 when home sizes temporarily increased due to the pandemic-induced demand for additional space for work and study at home, coupled with low interest rates.

Affordability and Market Challenges

In response to housing affordability challenges, more than one-third of builders reduced home prices in 2023. NAHB anticipates that builders will continue to offer smaller and more affordable home designs to address the affordability barrier to homeownership. However, builders still face significant supply-side challenges, including the scarcity of buildable lots, a shortage of skilled labor, and restrictive building codes, all of which increase construction costs. The median price of new homes in 2023 was $428,200, down 6% from 2022.

“Boosting the nation’s housing supply is key to improving housing affordability,” said Harris. “The residential construction industry is committed to keeping the cost of housing at the forefront of the national agenda and is working with all levels of government and both sides of the aisle so more Americans can achieve the dream of homeownership.”

Legislative Advocacy for Housing Priorities

NAHB members from across the country will gather to discuss housing priorities and affordability solutions with their members of Congress during NAHB’s Legislative Conference on June 12 in Washington, D.C. This event underscores the industry’s commitment to addressing housing affordability and ensuring that homeownership remains within reach for more Americans.

As the housing industry celebrates New Homes Month, the focus on building smaller, more affordable homes demonstrates a commitment to meeting buyer preferences and addressing affordability challenges. By continuing to innovate and advocate for policies that support the construction of affordable housing, the industry aims to make homeownership a reality for more families across the nation.

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