A recent analysis by the National Association of Home Builders (NAHB) found that millennial homebuyers prefer more square footage when seeking a new home than other generations, but that most of this buyer segment would sacrifice the extra space for a smaller home with more features at the same price point.
According to NAHB’s survey, millennial homebuyers expressed a desire for a home with a median of 2,408 square feet, which eclipsed the asking amount for space among all other generations. But more than half of millennial respondents (52%) also said they prefer a home with more features and amenities to a home that has more space.
NAHB chair Buddy Hughes noted in a statement that builders would do their best to meet the market where it’s at when considering how best to construct homes.
“Buyers are willing to make compromises to find the best possible home for their families,” he said. “Our nation’s builders are willing to meet buyers where they are and construct a high-quality home to meet their family’s needs.”
NAHB noted that data gathered by the U.S. Census Bureau affirmed that builders are building smaller homes. The median home size for a new build in 2023 was 2,200 square feet, a contraction from the median home size in 2024, when the Census Bureau found that new builds had a median home size of 2,150 square feet. The 2024 median home size was at its lowest point in 15 years after holding at 2,300 square feet for four straight years (2019-2022). In order to offset the smaller living spaces, builders are adding porches and patios to new construction, according to NAHB.
Homebuilders are also building smaller to address affordability concerns, according to NAHB. Interest rates are expected to remain above 6% for the duration of 2025. This fact, coupled with home prices at record highs, has created a confluence resulting in an affordability crisis among first-time homebuyers and those seeking to upgrade, according to NAHB’s analysis.
To tackle the affordability issue, which seems to have become increasingly pressing for the market, builders are making some concessions. According to the most recent NAHB/Wells Fargo Housing Market Index, nearly a third of homebuilders (29%) chose to cut home prices in March, an increase from 26% in February. The average price reduction for builders was 5% in March, the same as the previous month. Fifty-nine percent of builders elected to utilize sales incentives in March, also the same as February.
“Homeownership is key to strengthening communities across the country and helps families increase their level of economic prosperity,” Hughes continued. “The residential construction industry has solutions to help bring down the cost of housing and is willing to work with all levels of government to solve affordability challenges, so more families have a place to call their own.”
