Buying a home can still feel challenging, even as affordability improves. The good news?Builders are shifting their focus to smaller homes and offering key incentives to buyers. These trends can help if you're looking for a home that fits your budget.
Builders Are Moving Toward Smaller Homes
During the pandemic, many buyers sought larger homes, and builders responded by creating bigger spaces to accommodate work-from-home setups, home gyms, and virtual schooling.
Now, as affordability tightens, builders are prioritizing smaller single-family homes. Recent Census data highlights a notable trend toward smaller new builds over the past few years.
So why the change? Builders focus on meeting market demand, and today’s buyers are prioritizing affordability. Smaller homes generally come with lower price tags, making them more attractive to buyers. The National Association of Home Builders (NAHB) shares:
“Homebuyers are now looking for homes around 2,070 square feet, down from 2,260 square feet 20 years ago.”
Orphe Divounguy, Senior Economist at Zillow, adds:
"Cash-strapped buyers are seeking out lower-cost options, and developers are responding by adjusting the type and size of homes they build."
Why a New, Smaller Home Might Be Right for You
If you're struggling to find a home within your budget, it may be time to consider newly built, smaller homes. In addition to being more affordable, these homes often come with perks like price reductions and mortgage rate buy-downs.
According to Zonda’s latest data, over half of builders are offering incentives such as mortgage rate buy-downs, which could help lower your monthly housing costs. John Burns, CEO of John Burns Research & Consulting, emphasizes:
"Monthly payments are the top concern for buyers, and builders have responded with smaller, more efficient homes."
On top of that, a new construction home offers brand-new features, minimal maintenance, and some of the latest design trends. That’s a win-win, right?
As builders focus on smaller homes, budget-friendly options are becoming more available. If you're considering buying soon, connect with a local real estate agent to explore new homes in your area.
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