The average new home is getting smaller, but don’t expect a discount.
Even though soaring construction costs force builders and architects to employ clever design tactics to maximize space, home prices continue to climb, leaving budget-conscious buyers caught in a squeeze.
According to a July report by John Burns Research & Consulting (JBREC), budget-conscious builders downsized about a quarter of new homes last year. Yet, new home prices jumped 2.5% in 2023, peaking at nearly $441,000 in August.
Experts say this could mark the beginning of the end of the starter home.
“To get a lower-priced home built under $300,000, you’ll either have to build a smaller home or homes in a higher-density setting,” said Ali Wolf, Zonda’s chief economist in an interview earlier this year.
Designers are now four times more likely to plan for smaller homes than larger ones, according to JBREC.
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