More Money for Less Square Footage

Candy bars are now smaller but cost more. Same with ice cream, which doesn’t come in gallon cartons anymore. And now, shrinkflation has found the new home market.

The size of new construction has always bounced around somewhat, depending on the overall economy. And now, because of affordability problems, square footage is coming down again.

But not prices — at least not much. The median price tag on a new house was $410,800 in the second quarter of 2025, according to a National Association of Home Builders (NAHB) index. That’s just 1% less than in the first quarter, when the median was $416,000.

That little slide is also something of an anomaly. Between 2020 and 2024, the median selling price of a new single-family property “increased significantly,” NAHB reported, from $330,900 to $420,300. That’s a rise of 27%. 

At the same time, it’s worth noting, there was a sharp decline in sales of lower-priced houses. Homes priced under $300,000 experienced a 65% decline in sales, while sales of homes priced between $300,000 and $399,999 fell by 10%. In contrast, higher-end segments saw substantial growth, with sales of homes priced between $800,000 and $999,999 more than doubling and those priced at $1 million or more increasing by 85%.

The median house size, on the other hand, dipped in the second quarter from 2,197 to 2,125 square feet. That’s the smallest median since at least 2022 and the reversal of a trend toward larger homes that began with the advent of the pandemic.

Prior to COVID, the size of new houses was declining as builders were placing more emphasis on starter homes. And after a brief increase during the post-pandemic building boom when buyers wanted more space, square footage is trending lower again as builders try to combat affordability issues.