Americans Buying Smaller Homes

Homebuyers favor slightly smaller homes today than they did during the height of the COVID-19 pandemic, purchasing homes that are smaller by 1.8%, or 31 square feet, online real estate brokerage firm Redfin reported Wednesday.

“Buyers are purchasing smaller homes because, usually, the bigger the home the more expensive it is,” said Redfin Chief Economist Daryl Fairweather. “Even though we’re starting to see signs the housing market is cooling down, it’s still difficult for buyers on a budget to find everything they’re looking for in a home.

“That’s because there’s still a very limited supply of homes for sale, along with sky-high prices for the ones that are on the market and rising mortgage rates. If buyers don’t want to compromise on location, they probably need to settle for a smaller home,” she added.

Redfin said the median price per square foot for a house increased 20.1% to a record $230, from about $183 in March 2021.

Homebuyers purchased bigger homes at the beginning of the pandemic because they needed more space for home schooling and remote work, Redfin said. Just prior to the pandemic, the typical home that sold had about 1,713 square feet. As the pandemic set in, people started buying homes that were about 4.5% larger, with about 1791 square feet, Redfin said.

The average 30-year fixed mortgage is over 5%, Bankrate reports. Freddie Mac said the interest rate on a 30-year fixed mortgage was just over 3% this time last year.