The Latest Builder Trend: Smaller, Less Expensive Homes

The Latest Builder Trend: Smaller, Less Expensive Homes

Even though affordability is getting better, buying a home can still feel challenging. The good news is that builders are prioritizing smaller homes and offering valuable incentives to buyers. Both of these factors can make a big difference if you're concerned about finding a home that fits your budget.

Builders Are Building Smaller Homes 

During the pandemic, homebuyers sought larger homes, driven by the need for extra space for remote work, home gyms, and virtual schooling. Builders responded by constructing bigger homes to meet that demand. However, with affordability now a key concern, builders are shifting their focus to smaller single-family homes. Data from the Census highlights how this trend toward smaller homes has grown significantly in recent years (see graph below):

Builders are focusing on constructing smaller homes because they align with current market demand for affordability. Homebuyers today are prioritizing cost-effective options, and smaller homes generally come with lower price tags. As a result, both buyers and builders are gravitating towards properties with less square footage. According to the National Association of Home Builders (NAHB), this shift is driven by the need to meet the growing demand for more affordable housing options.:

 “. . . home buyers are looking for homes around 2,070 square feet, compared to 2,260 20 years ago.” 

And according to Orphe Divounguy, Senior Economist at Zillow:

“Not only are cash-strapped buyers continually seeking out lower-cost options, but developers are changing what type and size of home they're producing to try and meet that need." 

How a Newly Built Home Can Help You Achieve Your Homebuying Goals

If you're struggling to find a home within your budget, it might be worth considering new, smaller homes. These properties often come with added perks, such as price reductions or mortgage rate buy-downs, which can ease the financial burden. Recent data from Zonda shows that over half of builders are offering incentives, including rate buy-downs. These benefits can make a significant difference by lowering your future monthly mortgage payments. As John Burns, CEO of John Burns Research & Consulting, explains, builders are increasingly using these strategies to attract buyers.

“The monthly payment matters more than anything else and builders have responded with smaller, more efficient homes.”

Plus, with new home construction, you'll enjoy brand-new appliances, fewer maintenance issues, and the latest features on the market. It's a compelling option, especially when you're looking for affordability and convenience. Worth considering, right?

Bottom Line

With builders shifting toward smaller homes, you could have more budget-friendly options right when you need them. If you're planning to buy a home soon, let’s connect and explore what's available in your desired area.