Home buyers are facing shrinkflation in the housing market, paying higher prices for smaller homes. A LendingTree study shows that single-family homes have become 11% smaller over the past decade, while the price per square foot has surged by 74%. The average size dropped from 2,707 square feet in 2014 to 2,404 square feet in 2024. Rising land, labor, and material costs, along with tariffs, are forcing builders to reduce square footage while maintaining price points, leading to this troubling trend in housing markets across the U.S.
Housing shrinkflation isn't a new concept, but it's becoming more evident as both new- and existing-home prices remain elevated.
To keep projects viable, builders are trimming square footage but maintaining price points. It's not that we want to deliver less space, it's that the economics demand it.
Housing materials costs have been on the rise since the pandemic, but a recent study from Evernest shows President Donald Trump's tariffs have already added more than $100,000 to the cost of a new home in at least one state.
In the past decade, new homes are 11% smaller yet 74% more expensive per square foot, highlighting the serious impact of land, labor, and material costs.
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