Home Size Trends: Smaller New Homes Reflect Market Demand and Building Practices

Introduction

The typical newly built house on the market now is smaller than those for sale a decade ago. Whether this is a positive or bad omen depends on your priorities for your future home.

According to Census Bureau data, a single-family home under construction in the first quarter of 2024 had a median floor area of 2,140 square feet. According to the figures, this is down from a median of 2,256 square feet in the first quarter of 2023.

The new data represent the least number of new homes since the second half of 2009, according to a National Association of Home Builders report released in May.

According to a March press release from NAHB, new home construction has decreased since 2015, when the average home size peaked at 2,689 square feet. According to the publication, the only year home sizes increased within that period was 2021, when pandemic lockdowns fueled demand for room to work or study from home. Buyers want smaller homes.

Smaller homes assist in reducing building costs, but much of the movement is driven by consumer demand. According to experts, homebuyers are expressing a preference for smaller homes, whether in response to high prices or simply because they prefer a smaller space.

According to the National Association of Realtors’ 2024 Home Purchasers and Sellers Generational Trends Report, approximately 28% of polled purchasers recently acquired a home between 1,501 and 2,000 square feet, while 26% purchased a home between 2,001 and 2,500 square feet. Another 16% bought a house that is 1,500 square feet or less.

The study got 6,817 responses from purchasers 18 and older who acquired a property between July 2022 and July 2023.

How Zoning Affects Home Sizes

According to the NAHB, over 38% of builders built smaller homes in 2023, with 26% planning to build even smaller homes this year.
While buyer demand drives the trend, zoning regulations may also play a role.

According to Dietz, some governments use “exclusionary zoning practices,” which may restrict builders from building homes of a minimum lot size.

“If you’re building a home in a certain neighborhood and that home has to sit on a half acre lot, or a lot close to a full acre, you’re not going to be building a small home on that lot,” according to Dietz.

He added that the expansion of such zoning laws and regulatory fees made it harder for builders to develop new, smaller homes in the years following the Great Recession.

According to Dietz, some places have relaxed their zoning laws, allowing builders to create smaller townhouse residences.

According to US Census data, building around 42,000 townhouses, or single-family attached residences, commenced in the first quarter of 2024. The new statistic is 45% higher than in Q1 2023, according to NAHB.

“I don’t think it’s limited to one region, one type of geography,” according to Dietz. “I think it’s really in places where jurisdictions permit zoning for that medium-density environment.”

‘A reduction of space in the required rooms’

If you’re a buyer looking for a home around the median size, or approximately 2,000 square feet, “what you’re talking about going from a medium-sized home to a smaller home is a shrinking of the space in the required rooms,” Dietz explained.

Experts recommend using your space for numerous uses.

“We don’t have a dedicated office,” said Dietz, who resides in a two-bedroom townhouse with his wife, a college lecturer, and their children. “Our dining room/kitchen doubles as basically my wife’s office.”
He said space-saving storage around the house is essential for a smaller home.

“Literally every part of our home has a space that can be turned into storage, and we’ve converted that,” Dietz told me.
According to Lautz, the epidemic caused many homeowners to reconsider their properties.

“Some asked, ‘Do I need an extra bedroom, or could I use that as a home office or gym?'” she told me.

She explained that a smaller property can also result in lower energy and maintenance expenditures.

However, according to Lautz, if you want typical house spaces such as dining rooms, you may still find an existing property with those qualities.
“There’s always going to be that ebb and flow within properties and how that space is being used,” she told me.