Smaller New Homes: A Cost-Effective Trend

Rising home prices and borrowing costs are making large homes less affordable, leading to a trend of smaller new homes. After years of increasing sizes, buyers might need to adjust to homes with less square footage and fewer rooms—but this shift could be beneficial.

For the first time, new homes are cheaper than pre-owned homes by $3.50 per square foot. Not only would you save money, but you won’t have remodeling costs for years to come, not to mention that the home will be move-in ready.

Other good news is that more homes are being built in the affordable range between $200,000 and $350,000 which is saying a lot, considering that the latest national median home price was $439,950 in July 2024. According to the U.S. Census Bureau, new single-family homes had a median 2,140 sq. ft. in Q1-2024—that’s 116 square feet smaller than the median new home size in 2023.

Smaller homes also offer economic benefits, including lower utility and insurance costs, as well as easier maintenance.