It’s no secret that affordability is a concern for many homebuyers, especially with rising mortgage rates and home prices. If you’re looking for affordable new homes, you may find unexpected opportunities in newly built communities, where smaller homes offer a more cost-effective option.
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
In today’s market, affordable new homes are becoming increasingly popular, especially as builders focus on offering smaller, budget-friendly options.. That could give you more opportunity to find something that fits your budget. If you’re interested in finding the perfect home, check out our Guide to Buying Your First Home for tips on making the right choice.
