Builder Shift to Smaller, Cheaper Homes Addresses Affordability But Supply Shortage Persists
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New American homes are getting smaller, with median sizes down 4% in the past year to 2,179 square feet as builders prioritize affordability.
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Townhouses are surging in popularity, accounting for 1 in 5 new homes under construction, a record high.
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Large national builders like D.R. Horton and Toll Brothers are shifting focus to build more smaller, entry-level homes under $400k.
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There's a critical shortage of affordable starter homes, with prices up 45% since 2019, that's locking out first-time buyers.
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Even with the shift, experts caution more sustained construction is needed to put a dent in the housing supply shortage.