What Are New-Construction Buyers Giving Up?


Builders have turned their sights to buyers of moderate means, and house size reflects that change. Fewer now have dining rooms, bathtubs and/or family rooms.

NEW YORK – With some potential buyers feeling priced out of the housing market, home builders are finding ways to make their product more affordable to increase their pool of customers – and reducing a new single-family home’s size is an increasingly popular way to do so. Smaller homes can help cost-constrained buyers facing high mortgage rates.

Since 2018, the average unit size for new housing starts has decreased 10% nationally to 2,420 square feet, according to Livabl by Zonda, a listing platform for new construction homes.

While overall new single-family-home construction starts declined in 2022, the share of smaller-home starts did not. Those for homes with fewer than three bedrooms increased 9.5% year-to-year.

Most builders and architects follow the same strategy to produce tighter, more efficient living spaces: They remove things. Recently they’ve been taking out dining areas, bathtubs and separate living rooms.

Secondary bedrooms and loft spaces are also shrinking and sometimes disappearing.

At the same time, builders are increasing the size of multiuse rooms like kitchens and great rooms, and shared spaces – like bathrooms located between and shared by two bedrooms – are on the rise.

The smaller floor plans usually mean that buyers get less space for their dollar and pay more per square foot, according to the U.S. Census Bureau. Inflation-adjusted cost per square foot increased about 2.5% on average between 2012 and 2020. In both 2021 and 2022, it increased nearly 4%, according to John Burns Research and Consulting.

Source: Wall Street Journal (08/22/23) Eastland, Maggie

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