Buyers Look to Smaller Starter Homes
Home shoppers are finding creative ways to achieve homeownership, including buying smaller homes and opting for multigenerational living.
NEW YORK – Harvard University's Joint Center for Housing Studies released its State of the Nation's Housing 2025 report, which indicated that homebuilders are addressing affordability challenges and high borrowing costs by building smaller, starter homes.
"The median size of a new single-family home declined for the third straight year in 2024, down to 2,150 square feet," which is down from nearly 2,500 square feet in 2013 and closer to the roughly 2,100-square-foot average seen in 2009, during the worst of times of the global financial crisis.
Daniel McCue, a senior research associate at the Joint Center for Housing Studies, said, "Homebuilders are able to make adjustments to meet demand where it is, and what it's showing is that there's demand for lower-cost units. Buyers look like they're willing to buy slightly smaller homes to be able to afford them, given that prices have risen so high over the past three, four, five years, and interest rates remain relatively high as well."
Buyers continue to look for ways to save money, and builders are answering that need by reducing the square footage of new, starter homes.
Hannah Jones, Realtor.com senior economic research analyst, said, "Home shoppers are finding creative ways to achieve homeownership, including buying smaller homes and combining forces with family and opting for multigenerational living. Though these circumstances may call for different home types, the main motivation is affordability."
The report expects these new consumer expectations and builder strategies to reshape what a "starter home" is in 2025 and beyond.
Source: Realtor.com (06/29/25) Bizouati-Kennedy, Yael
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