By A decade ago, the average U.S. home size was 2,657 square feet, and the average household size was 2.58 persons. Today, the square footage and household size have decreased in America for one simple reason: cost. However, it is not just the cost to build but also the cost to operate a home, which can be a buyer’s second-largest expense after the mortgage.
To lure new home buyers who are leery of high mortgage rates and housing costs, home builders are thinking smaller. After all, smaller homes come with smaller price tags. Census Department data reveals the builder trend toward smaller single-family homes, with the average square feet of floor area for new privately owned homes shrinking from 2,485 to 2,367 from 2022 through 2024. Small homes also have some pretty significant benefits to buyers. Here are four reasons why the small home trend is good for buyers:
- Smaller Home, Better Energy Efficiency
Smaller homes are less expensive to operate, using less energy for heating, cooling, lighting, and appliances. This means not only lower utility bills but a reduced carbon footprint. Equally important, home builders constructing smaller homes incorporate energy-saving features, like raised heel trusses for more insulation, energy-efficient windows, and high-efficiency HVAC equipment to sweeten the deal.
- Affordable Insurance Rates
Smaller homes generally have lower homeowner insurance rates than larger homes, as the size of a house directly impacts insurance premiums. According to the Joint Center for Housing Studies, homeowner insurance costs have increased 74 percent since the Great Recession. [1] As climate change drives more destructive storms, some homeowners are forgoing home insurance. The value of uninsured homes in America currently stands at $1.6 trillion. This presents an incredible risk to homeowners.
Building smaller means lower insurance premiums, and with costs overriding most other factors as buyers consider new home purchases, smaller makes sense.
- More Intentional Design
Builders must be intentional about design choices that leverage every available square foot of space in smaller homes. Many large new homes have wasted space with rooms that rarely, if ever, get used. By emphasizing functionality over space, home builders taking advantage of the small home trend are attracting attention from buyers who want the most practical space for their lifestyles and budgets.
- Smaller Homes Lessen Homeowner Stress
Finding affordable homes in America is getting harder and harder for potential buyers, primarily because of affordability. The small home trend can ease the financial burden for buyers by giving them the manageable monthly housing expenses they desire.
[1] https://www.jchs.harvard.edu/blog/insurance-crisis-continues-weigh-homeowners