Skip to content

Go big or go home? Nope.


April 17, 2024

Builders seeking bigger housing sales have ignited a trend by going smaller.

A new National Association of Home Builders (NAHB) report reveals that new homes built in 2023 reached their smallest median size in 13 years. Why? Builders want to make homes more affordable, especially for first-time home buyers.

“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. “Our nation’s builders are meeting the moment by finding solutions in home construction to allow for more individuals to purchase a home.”

More than a third (38%) of builders say they built smaller homes in 2023, and more than a quarter (26%) plan to construct even smaller homes this year, according to NAHB.

A recent Washington Post story referred to this trend as “smaller and taller,” noting that the move towards smaller buildings includes townhomes, which represent 1 in 5 smaller new homes. The Post article noted that the move toward smaller homes reverses a trend for larger, more wide-open homes and spaces that emerged during the pandemic. As the article notes, Extra pandemic savings, combined with low interest rates, made it possible for many families to buy a home for the first time or upgrade to a larger, more expensive property.

That’s all changed with the pandemic subsiding and interest rates climbing to combat inflation. Steeper mortgage rates have buyers seeking more affordable homes, and builders are looking to meet that need. The NAHB What Buyers Really Want study indicates the downward shift has gone on for 20 years.

Smaller also means fewer windows, cabinets and doors – and a shift towards less expensive amenities, Eric Finnigan stated in a 2023 Yahoo Finance article on the subject.

“Builders are changing up design specs and features to simplify designs and reduce costs,” Finnigan said. “That includes switching out higher-priced materials for lower-cost, easier-to-install options, removing built-ins, and fewer windows.”

The increase stems from a growing demand for affordable housing and more inventory for first time home buyers. President Joe Biden proposed measures to address the issue in his recent State of the Union address, including offering $9,600 in tax credits that Americans could put toward a mortgage.

“I know the cost of housing is so important to you,” Biden said. “Inflation keeps coming down, and mortgage rates will come down as well. But I’m not waiting.”


Scroll To Top