What’s the ultimate hack to afford a home in today’s over-inflated market? According to the National Association of Home Builders (NAHB), buyers are looking for smaller homes that come with smaller price tags. Builders are responding accordingly; an 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, Kansas. “Our nation’s builders are meeting the moment by finding solutions in home construction to allow for more individuals to purchase a home.”
NAHB’s latest “What Home Buyers Really Want” study suggests buyers have been progressively scaling down their prospective home size for decades, stating that the typical buyer wanted 2,260 square feet in 2003, and now that number is 2,067 square feet.
Builders surveyed by NAHB expect that trend to continue this year, with more than a third (38%) of builders saying they built smaller homes in 2023, and more than a quarter (26%) plan to construct even smaller this year.
Since 2015, the only year NAHB noted a home size increase was in 2021, due to the pandemic-induced desire for additional space to work/study from home and the low interest rate environment that allowed buyers to purchase those bigger homes.
The strategy to scale down does seem to work for many buyers since 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.
The median price of new homes in 2023 was $428,200, down 6% from 2022.
However, builders face supply-side challenges that continue to increase the cost of constructing homes, such as the scarcity of buildable lots, lack of skilled labor and restrictive codes.
“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.”
