Americans want government involvement in encouraging the creation of affordable housing
Dr. Steven Kull talks to USA TODAY Opinion about what his organization has learned about American sentiment on the housing market.
First it was grocery go-to’s like breakfast cereals, chips, and laundry detergent, but now your home may be getting hit by shrinkflation, too.
The average size of new single-family homes sold nationwide declined by 11.6% over the past decade, from 2,724 square feet in 2015 to 2,409 square feet in 2025, according to an analysis of U.S. Census Bureau data by comparison site LendingTree. Yet buyers are paying more for less, with the average price per square foot surging 71.9% during the same period, it said.
Shrinking the size of goods but maintaining or increasing their prices is seen as a sign of building cost pressures. When inflation soared in 2022, peaking at 9.1% in June that year, manufacturers coped with fast-rising prices by shrinking the size of their goods but keeping prices high. That’s a practice known as shrinkflation, a term made famous by economist Pippa Malmgren around 2009.
Now the practice is showing up in the housing market. “The trend reflects a combination of economic pressures,” the report said. “Builders have increasingly constructed smaller homes to help offset rising land, labor and material costs while keeping prices within reach for buyers contending with higher mortgage rates and affordability constraints.”
Are Americans buying these smaller homes?
Yes. In 2025, 1 in 4 new single-family homes sold measured less than 1,800 square feet, up from just 16% in 2015, LendingTree said. At the same time, the share of larger homes measuring at least 3,000 square feet fell from 33% to 20%.
Why are Americans buying smaller homes?
Americans are purchasing smaller homes for various reasons, with budgets as a top motivator. With mortgage rates lingering between 6% and 7%, more than double the rates seen during the pandemic, smaller homes can fit more comfortably into a buyer’s budget – especially for first-time buyers, LendingTree said.
“A lower total price may reduce the down payment and monthly mortgage payment, but … paying nearly three-quarters more per square foot for a smaller home shows how much housing costs have risen,” Schulz said. Today’s homebuyers are getting significantly less space for every housing dollar than buyers did a decade ago, he said.
Demographic shifts, including smaller households, also are influencing the trend, LendingTree said. More buyers are “embracing ‘right-sizing’ over maximizing square footage, and a greater emphasis on efficient layouts have increased demand for homes that offer less space without sacrificing functionality.”
While price per square footage is high, maintenance costs of a smaller home are lower and can provide savings down the road.
“Smaller homes can cost less to heat, cool, furnish, maintain and repair,” Schulz said. “Those recurring savings can be a big deal, particularly for first-time buyers whose budgets may already be stretched by mortgage payments, property taxes and insurance.”
Where are houses shrinking most?
The South saw the sharpest decline in average new-home size over the past decade (13.4%), followed by the Midwest (12.2%) and the West (9.2%), LendingTree said.
Smaller homes are most popular in the Midwest, where 31% of new homes sold in 2025 were under 1,800 square feet, the report said. The West followed closely with 28% and the South at 24%. The Northeast had the lowest share at 19%.
“The gradual decline since 2015 (in house size) suggests builders are responding to affordability challenges by designing homes that use space more efficiently rather than simply making them bigger,” Schulz said.
Can Americans still find bigger new homes?
If you’re keen to buy a bigger new house, your best bet would be in the Northeast, the study showed. It’s the only region in the U.S. where the average new-home size increased. Home size grew by 1.1%, on average, the study showed.
Last year, the average new home size in the Northeast was 2,866 square feet, compared to the Midwest, which had the smallest, averaging 2,262 square feet, LendingTree said. The West had the second-smallest average home size at 2,373 square feet, followed by the South at 2,420 square feet, it said.
“The Northeast is a bit of an outlier because land and construction costs are so high that builders often focus on larger, higher-end homes,” Schulz said. “The region may not be resisting the national trend because buyers want bigger homes, but because the economics of building make larger, higher-end projects a smarter move for builders.”
But that extra square footage will still cost you. The Northeast experienced the largest jump in average price per square foot, rising 97.2% since 2015, LendingTree said. The West followed with an 87.1% increase, the South with a 70.4% rise, and the Midwest, which saw an increase at 60.9%.
Medora Lee is a money, markets and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.