NAHB: Home-Buyer Preferences Shift as Affordability Challenges Remain

As the housing industry celebrates New Homes Month in April, builders continue to respond to buyer preferences by constructing smaller homes to place homeownership within reach of families planning to buy a home this year. A National Association of Home Builders (NAHB) analysis found that new homes built in 2023 reached their smallest median size in 13 years.

“Homeownership remains a goal for families who are eager to put down roots and have a place to call their own,” said NAHB Chairman Carl Harris, a custom home builder from Wichita, Kan. “Our nation’s builders are meeting the moment by finding solutions in home construction to allow for more individuals to purchase a home.”

More than a third (38%) of builders say they built smaller homes in 2023, and more than a quarter (26%) plan to construct even smaller this year, according to NAHB. According to NAHB’s latest What Home Buyers Really Want study, there has been a downward shift in buyer preferences for home size in the last 20 years. In 2003, the typical buyer wanted 2,260 square feet; now, that number is 2,067 square feet.

Data from the U.S. Census Bureau confirm new homes have been shrinking for nearly a decade. The average (median) size of new homes built in 2023 fell to 2,411 (2,179) square feet, the smallest since 2010. The drop was a continuation in a downward trend that began in 2015. The only year that saw home size increase during this period was 2021, due to the pandemic-induced desire for additional space to work/study from home and the low interest rate environment that allowed buyers to purchase those bigger homes.

More than one-third of builders cut home prices in 2023. NAHB expects builders to continue offering smaller homes and more affordable designs as housing affordability remains a barrier to homeownership. Yet builders face supply-side challenges that continue to increase the cost of constructing homes, such as the scarcity of buildable lots, lack of skilled labor and restrictive codes. The median price of new homes in 2023 was $428,200, down 6% from 2022.

“Boosting the nation’s housing supply is key to improving housing affordability,” said Harris. “The residential construction industry is committed to keeping the cost of housing at the forefront of the national agenda and is working with all levels of government and both sides of the aisle so more Americans can achieve the dream of homeownership.”

NAHB members from around the country will discuss housing priorities and affordability solutions with their members of Congress during NAHB’s Legislative Conference, which will take place on June 12 in Washington, D.C.

Contact:

Elizabeth Thompson – ethompson@nahb.org – (202) 266-8495

Source: National Association of Home Builders