Starter Homes Under $300k Extinct as Median New Home Size Shrinks to 2010 Level

The median size of new single-family homes in the U.S. fell to its smallest since 2010 last year amid housing affordability challenges.

Starter homes under $300,000 are becoming extinct due to higher building costs and land values. Builders are now defining "entry-level" as under $400,000.

Homebuilders are building smaller to try to solve affordability issues, but prices aren't coming down proportionately. This is known as "shrinkflation."

Builders are cutting secondary bedrooms and prioritizing kitchens, backyards and other valued spaces when downsizing floorplans.

The downsizing trend predates the pandemic but accelerated over the last 5 years. Builders temporarily built larger during COVID as buyers wanted more space.