Thanks for supporting Marketplace this Giving Tuesday. If you missed it - you can still contribute to powering public media! Donate Now!

Home builders try to make houses more affordable by making them smaller

Savannah Peters Nov 1, 2023
Heard on:
HTML EMBED:
COPY
The construction of smaller homes now could help ensure affordable inventory in the long run. Mario Tama/Getty Images

Home builders try to make houses more affordable by making them smaller

Savannah Peters Nov 1, 2023
Heard on:
The construction of smaller homes now could help ensure affordable inventory in the long run. Mario Tama/Getty Images
HTML EMBED:
COPY

Spending on residential construction was up .4% in September, according to new data out Wednesday morning from the Commerce Department..

While the cost per square foot of a new home is rising, the average size of those homes is shrinking as builders try to make the math work out for buyersHigher building costs and interest rates make this a tough market with many potential buyers priced out. 

Early in the pandemic, some of our houses started to feel a little cramped

“People found themselves working from home, spending more time at home,” said Rose Quint with the National Association of Home Builders.

Buyers were looking for home offices, space to work out in, and “of course, very low interest rates allowed them to buy those bigger homes,” she added.

“But now we’ve seen a force more powerful than work from home, which is affordability,” noted Ali Wolf with the housing data firm Zonda.

Higher mortgage rates are driving demand for smaller homes; the average size of a new build is down 10% since 2018.

And while today’s buyers may wish they could afford that extra bedroom or a bigger kitchen, “having builders pivot toward more affordable homes by offering a smaller square footage can be really good,” said Wolf.  

It helps ensure there’s affordable inventory in the long run, she said.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.