Article: Less money, less house: How market forces are reshaping the American home – Washington Post

By Abha Bhattarai
The Washington Post
March 10, 2024

The new American home is shrinking.

After years of prioritizing large homes, the nation’s biggest and most powerful home builders are finally building more smaller ones, driving a shift toward more affordable housing.

The boom in smaller construction has cut median new-home sizes by 4 percent in the past year, to 2,179 square feet, census data shows, the lowest reading since 2010. That’s helped bring down overall costs and contributed to a 6 percent dip in new-home prices in the same period.

Townhouses, in particular, are increasingly popular, accounting for 1 in 5 new homes under construction at the end of 2023, a record high, according to an analysis of census data by the National Association of Home Builders. To cut costs, companies are building smaller and taller, with fewer windows, cabinets and doors.

Altogether, this wave of new construction promises a crucial first step toward addressing a critical shortage of starter homes that has sidelined first-time home buyers and contributed to inflation.

“Even a slightly smaller home can be thousands of dollars cheaper — for both builders and buyers,” said Andy Winkler, director of housing and infrastructure at the Bipartisan Policy Center, a Washington think tank. “This is a trend driven by just how unaffordable housing has become, with sky-high prices, rising interest rates and so few homes for sale.”

Nikki Cheshire kicked off her home search in Frederick County, Va., with a wish list: three bedrooms, an attached garage and a yard for her dog. But she quickly realized she’d have to think smaller.