Weekly real estate market update 1/24/25… average new home size has gotten smaller

With weather cold enough to close schools this week, it should come as no surprise that showing activity didn’t follow the upward trend of past years.

New listings and price changes also trended down this week, as did coming soon listings. The bright spot is pending sales, which continued their gentle trend upward, as they have all year so far.

Another downward trend is the new construction trend towards smaller size homes… hence, more affordability both in construction costs and buyer prices. Read more about it in the article below from our blog at Keeping Current Matters.

Sharlene Hensrud, RE/MAX Results – shensrud@homesmsp.com

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It’s no secret that affordability is tough with where mortgage rates and home prices are right now. And that may have you worried about how you’ll be able to buy a home. But, if you don’t need a ton of space, you may find you have more cost-effective options in an unexpected place: new home communities.

Builders Are Building Smaller Homes 

Since smaller homes typically come with smaller price tags, buyers have turned their attention to homes with less square footage — and builders have shifted their focus to capitalize on that demand. As U.S. News notes:

“The combination of higher home prices and mortgage rates has strained a lot of people’s budgets. And that’s something builders recognize. To this end, they may be leaning toward smaller spaces . . .That, in turn, can lead to savings for buyers.”

Data from the Census shows the overall builder trend toward smaller, single-family homes has been over the last couple of years (see graph below):

As the graph shows, the average size of a brand-new home has dropped from 2,309 square feet in Q3 2022 to 2,171 square feet in Q3 2024. That’s a difference of 138 square feet.

At the end of the day, builders want to build what they know will sell. And the number one thing homebuyers are looking for right now is less expensive options to help offset today’s affordability challenges. As Multi-Housing News notes:

“The growing trend toward smaller homes is evident. These homes are less expensive to build and more attainable for many middle-income families, meeting both housing needs and modern lifestyle preferences.”

The Benefits of These Brand-New Homes

So, if you’re having trouble finding a home in your budget, it might be worth exploring newly built homes with a smaller footprint.

Not to mention, since newly built homes come with brand new everything, they have fewer maintenance needs and some of the latest features available, like energy-efficient appliances and HVAC. That’ll help you save on repair costs and your monthly utility bills. Sounds like an all-around win.

Bottom Line

Today’s builders are focusing their efforts on smaller homes at lower price points. That could give you more opportunity to find something that fits your budget. If you’re planning to buy soon, let’s connect to explore what’s on the market in your area and get your homeownership goals over the finish line.

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I love what I do! Highly insightful, analytical and creative, there is nothing I love more than helping you find the right solution for your real estate transition. My mission is to serve my clients with honesty and integrity, exceeding their expectations in service and support… and to help others by donating a portion of every transaction to Habitat for Humanity.

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