As housing affordability challenges remain, the square footage of new homes is shrinking as buyers are learning to prioritize.
Per findings from the economics team of data platform Zonda Home (published by New Home Source), the average new home is about 2,175 square feet as of December 2025.
This is about 125 feet smaller than the “peak” recorded six years ago in February 2019. Additionally, while there is of course regional variance, 80% of the top 50 U.S. housing markets have seen average home size decline during this time.
Speaking to RISMedia, Zonda Chief Economist Ali Wolf explains a key motivation behind this investigative report was to track not only buyer behavior, but how builders are adjusting the homes they’re constructing to meet buyer behavior.
“Addressing affordability is not really the responsibility of existing homeowners. Homebuilders, on the other hand, have greater control over the equation,” says Wolf. “They can build farther from urban centers, offer smaller floor plans or make other changes that reduce costs. With affordability remaining a key challenge, we wanted to understand the extent to which builders are actually adjusting their product offerings today.”
As affordability has increasingly defined the housing market, data shows new homes—traditionally more costly than existing ones—are priced more and more competitively. Builders have also found ways to make homeownership more affordable—seemingly also by shrinking their total size.
The report notes that smaller homes are not only more financially reachable for first-time buyers, they can also offer a better daily living experience if optimized with the right layouts and features. Indeed, the metro areas which have seen average home size gains, such as New York City and San Francisco, are high-cost areas that attract “buyers with significant equity, higher incomes and who are less reliant on financing,” as the report puts it.
“When mortgage rates and prices stay elevated, buyers make trade-offs, and square footage is usually the first to go,” said Wolf in the report, adding that “size is the most flexible variable in the home-buying equation right now.”
The report finds that this decline began in 2019, but was interrupted by the Covid-19 pandemic. As buyers/homeowners would be spending more time at home, “demand for more space surged,” per the report. Additionally, mortgage rates fell during this period, reaching around 3%, giving buyers more room on affordability.
As a result, throughout 2022, average square footage began to rise and by the end of that year, the survey found, the average size of a new home reached 2,263 square feet. However, through 2023 to 2024, both buyers and builders faced cost pressures ranging from mortgage rates and home prices rising on the consumer side to high building material costs and labor shortages on the builder side.
“All else equal, most consumers would prefer a larger home if they can afford it. During the early pandemic years, buyers had both the desire and the financial ability to move up in size,” says Wolf, adding that she remains skeptical that such conditions will align again in the near future.
“Until incomes rise meaningfully relative to home prices and borrowing costs decline, we expect smaller homes to become a more accepted and increasingly common part of the housing landscape. Rather than being viewed as a compromise, smaller homes are likely to become the new normal for a growing share of buyers,” she concludes.
How buyers are taking to smaller homes
The report indicates that while buyers may be sacrificing space, that doesn’t mean they’re settling for less in other areas.
“Buyers aren’t willing to sacrifice quality and still expect high-quality finishes in the homes they purchase,” said Wolf.
For instance, buyers are prioritizing the functionality of spaces, i.e., making the most of a smaller space rather than seeking more space for its own sake. It was also noted that not all room sizes are shrinking alongside the general decline in square footage, with open kitchen layouts being specifically named as a feature buyers prioritize. Builders, too, are responding to what buyers want.
“Builders are designing with intention, maximizing every square foot with layouts and features that adapt to how people actually live,” said Karyn Bonder, NewHomeSource home trends expert. “Buyers are willing to sacrifice size, but not function, and builders are meeting that demand.”
“I know from personal experience that when people are house hunting, they often have a specific set of criteria in mind,” Wolf elaborates. “A prospective buyer might say they want a four-bedroom, three-bathroom single-family home with at least 2,500 square feet. What many shoppers may not realize, however, is a thoughtfully designed 2,000-square-foot home with the same number of bedrooms and bathrooms can often look better, live better and function more efficiently than a larger home.”
For the full report, click here.
