Affordability Is Improving, But Buying a Home Still Feels Tough? Here’s Some Good News
While home affordability is starting to improve, the process of buying a home can still feel challenging. But here’s a silver lining: builders are shifting their focus toward constructing smaller homes, while offering attractive incentives to buyers. If you’re concerned about finding a home that fits your budget, these trends could work in your favor.
The Shift to Smaller Homes
In response to the pandemic, many homebuyers sought out larger homes to accommodate new lifestyle changes—working from home, setting up home gyms, or creating extra spaces for virtual schooling. Builders answered that demand by designing more expansive homes to meet the needs of those who could afford them.
However, as affordability tightens, builders are now prioritizing smaller, single-family homes. Recent Census data highlights the growing trend of more compact new builds over the past couple of years. This shift reflects a growing effort to make homeownership more accessible to a wider range of buyers.
Why Are Builders Focusing on Smaller Homes Now?
Builders are always tuned in to market trends, and right now, the focus is on building homes that meet the demand for better affordability. With homebuyers seeking more cost-effective options, smaller homes—often with smaller price tags—are taking center stage. Builders are adjusting their strategies to match this shift.
According to the National Association of Home Builders (NAHB), buyers today are eyeing homes around 2,070 square feet, compared to the 2,260 square feet that was more common 20 years ago. This change reflects a growing desire for affordability.
Orphe Divounguy, Senior Economist at Zillow, supports this, saying:
“Not only are cash-strapped buyers continually seeking out lower-cost options, but developers are changing what type and size of homes they’re producing to try and meet that need.”
How a Newly Built Home Can Help You Meet Your Homebuying Goals
If finding a home within your budget feels difficult, it might be time to explore newly built, smaller homes. In addition to their lower price points, many builders are offering enticing incentives, such as price reductions or mortgage rate buy-downs, which can significantly improve affordability.
Recent data from Zonda shows that over half of builders are providing incentives, including mortgage rate buydowns. These perks can help reduce your monthly payments, giving you financial breathing room. As John Burns, CEO of John Burns Research & Consulting, says:
“The monthly payment matters more than anything else, and builders have responded with smaller, more efficient homes.”
Plus, a newly built home means brand-new everything, fewer maintenance concerns, and access to modern features—making them an appealing option.
Bottom Line
With builders focusing on smaller, more affordable homes, you may have more options within your budget. If you’re ready to explore your homebuying options, let’s connect and see what’s available in your preferred area.