Every square foot can count in pricing a home. As such, home buyers are purchasing smaller homes as prices continue to soar.
New data from Redfin shows that Americans are purchasing smaller homes than they did earlier on in the pandemic. In March, the typical home under contract was 1,720 square feet. That is down 1.8% compared to a year ago and about the same size as homes that were selling prior to the pandemic, according to Redfin’s research.
During the early stages of the pandemic, home buyers had been in a rush to upsize their homes in the search for more space. But that trend is quickly reversing due to higher home prices, housing analysts say.
“Buyers are purchasing smaller homes because usually the bigger the home, the more expensive it is,” says Daryl Fairweather, Redfin’s chief economist. “Even though we’re starting to see signs the housing market is cooling down, it’s still difficult for buyers on a budget to find everything they’re looking for in a home. That’s because there’s still a very limited supply of homes for sale, along with sky-high prices for the ones that are on the market and rising mortgage rates. If buyers don’t want to compromise on location, they probably need to settle for a smaller home.”