American homes are getting more expensive while also shrinking in size
While the dream of owning a home remains alive, the reality is that homes are becoming increasingly expensive, all while shrinking in size.
The American dream of homeownership is facing a paradoxical challenge: homes are becoming increasingly expensive while simultaneously decreasing in size. This phenomenon, dubbed “housing shrinkflation,” is reshaping the real estate landscape and affecting potential homebuyers across the nation.
Data from the US census, collated by Fixr, shows the changes.
Over the past decade, the median size of newly built homes in the United States has decreased significantly. In 2023, the typical new home measured 2,233 square feet, a stark contrast to the 2,453 square feet recorded in 2014. This represents a decrease of 220 square feet, or a 9% reduction in overall size.
At the same time, the median sales price for new homes has surged by over $140,000 in the past ten years, marking a 49% increase. This stark contrast between shrinking sizes and ballooning prices has left many prospective homeowners facing a challenging market.
Why this phenomenon is happening
Dennis Shirshikov, Head of Growth at Gosummer.com, points to rising land costs, building regulations, and the demand for high-end features as key factors. Ryan Zomorodi, Co-Founder of Real Estate Skills, emphasizes the role of persistent high costs for land, materials, and labor, coupled with strong demand and limited supply.
Huge range of prices for new homes across the country
The cost of new homes varies significantly across the United States. Hawaii tops the list with a median new home price of $1,082,897, followed closely by Massachusetts at $1,033,271. On the other end of the spectrum, Mississippi offers the most affordable new homes, with a median cost of $295,835.
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