Even though housing affordability is improving, buying a home can still feel challenging. But there’s good news: builders are increasingly focusing on constructing smaller homes and offering key incentives to buyers. These changes can make a big difference if you are concerned about finding a home that fits your budget.

 

Builders Are Focusing on Smaller Homes

During the pandemic, many homebuyers sought larger homes as they needed extra space for remote work, home gyms, and virtual schooling. Builders responded by constructing bigger homes to meet this demand.

Now, with affordability being a primary concern, builders are shifting their focus to smaller single-family homes. Data from the Census highlights the significant trend toward smaller new homes over the past few years.

But why are builders opting to build smaller homes now? Ultimately, builders aim to meet current market demand by constructing homes that they know will sell. The top priority for today’s homebuyers is affordability, and smaller homes generally come with smaller price tags. As a result, both buyers and builders are gravitating towards homes with less square footage. The National Association of Home Builders (NAHB) notes:

“. . . home buyers are looking for homes around 2,070 square feet, compared to 2,260 square feet 20 years ago.”

Orphe Divounguy, Senior Economist at Zillow, adds: “Not only are cash-strapped buyers continually seeking out lower-cost options, but developers are changing what type and size of home they’re producing to try and meet that need.”

 

How a Newly Built Home Can Help You Achieve Your Homebuying Goals

If you are struggling to find a home within your budget, it might be time to consider new construction with a smaller footprint. Doing so could also bring additional benefits, such as price reductions or mortgage rate buydowns.

According to the latest data from Zonda, more than half of builders are offering incentives, including mortgage rate buydowns. These perks can help lower your future monthly housing payments as well. John Burns, CEO of John Burns Research & Consulting, emphasizes: “The monthly payment matters more than anything else, and builders have responded with smaller, more efficient homes.”

Plus, with new home construction, you will enjoy brand-new features, fewer maintenance needs, and some of the latest amenities available. That is worth exploring, right?

 

Bottom Line

With builders focusing on smaller homes, you now have more budget-friendly options when it matters most. If you are considering buying a home soon, work with Scott and the Smolen Team to explore what is available in your desired area.