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Single-Family Square Footage Is Falling as Housing Affordability Concerns Mount

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Single-Family Homes

Single-Family Square Footage Is Falling as Housing Affordability Concerns Mount

As housing prices surge, builders are delivering smaller and more affordable homes to a cost-conscious buyer pool 

October 21, 2022
Aerial view of homes in residential community
Image: Stock.adobe.com

The average square footage in new single-family homes is on the decline as housing costs surge to historic highs and homebuyer demand continues to fall. The average new house size was 2,480 square feet in 2021, down 7% from the 2015 peak of 2,687, and while square footage remains historically high, recent drops follow similar downsizing trends from past housing recessions, the Mises Institute reports.

As home sales and home prices taper off in a market cooldown driven by elevated mortgage rates, soaring inflation, and falling wages, builders are reconsidering their house plans and working to deliver smaller and more affordable homes that will appeal to more cost-conscious buyers.

But we may have finally hit the wall on home size. In recent months we're finally starting to see evidence of falling home sales and falling home prices. It's only now, with mortgage rates surging, inflation soaring, and real wages falling—and thus home price affordability falling—that there are now good reasons for builders to think "wow, maybe we need to build some smaller, less costly homes."  There are many reasons to think that they won't, and that for-purchase homes will simply become less affordable. But it's not the fault of the builders.

Read more

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