Home buyers are embracing smaller, more thoughtfully designed homes as affordability remains a key concern. The median home size has shrunk from 2,200 square feet in 2023 to 2,150 square feet in 2024—the smallest in 15 years—after holding steady at 2,300 square feet from 2019 to 2022. Similarly, median lot sizes have declined by about 1,000 square feet over the last 15 years, now averaging 8,400 square feet.
At the same time, townhomes are surging in popularity, accounting for a record 17% of the single-family housing market compared to just 10% in 2009.
“The reason is simple: Townhomes offer a more affordable option as material, land, and labor costs continue to rise,” explains Rose Quint, NAHB assistant vice president of survey research. She also notes that the price gap between new and existing homes is narrowing. While the median price of existing homes climbed 5% in 2024 to $412,000—surpassing the $400,000 mark for the first time—the median price of new homes actually dropped by 2% to $420,000.
To maximize living space, builders are incorporating more porches and patios—features now found in 68% and 64% of new homes, respectively. In response to affordability pressures, they’re also employing sales incentives (64%) and price reductions (33%) to attract buyers.
Home Size Preferences Vary by Generation
While overall home sizes are trending smaller, preferences vary across generations:
- Millennials prefer larger homes, with a median size of 2,408 square feet.
- Boomers are downsizing, favoring homes around 1,869 square feet.
- Gen X and Gen Z target homes around 2,250 square feet.
Across all age groups, there’s a growing preference for smaller homes with high-quality materials and amenities over larger homes with fewer features. More than half of Gen Z (53%) and millennials (52%) are willing to make this trade-off, and that percentage climbs to 61% for Gen X and 70% for boomers.
Similarly, each generation has different price expectations when considering townhomes over single-family homes of comparable size and quality. While Gen Z would require a 20% discount, boomers would expect at least 30% off to make the switch.
Style & Functionality: A Shift Toward Personalization
When it comes to exterior design, generational preferences are mixed. Gen Z and millennials lean toward contemporary aesthetics, while Gen X and boomers favor traditional styles. To accommodate this broad spectrum, builders are embracing a “retro revival” trend—blending mid-century modern elements, clean lines, and warm textures into affordable, adaptable designs. Features like gable windows and mixed materials allow for stylish yet cost-effective solutions.
More than ever, home flexibility is a priority. Buyers are looking for spaces that support different life stages, wellness activities, and stronger connections to nature. “People are being less influenced by influencers,” says Doug Cummins, senior associate and project manager at DAHLIN Group Architecture and Planning. “Today’s buyers are more sophisticated. They want homes that reflect their personal style and create a deeper connection to their space.”
Must-Have Features for 2025 Homes
Certain design elements continue to resonate across all generations. Top tech features include:
- Security cameras
- Wireless security systems
- Video doorbells
Meanwhile, functional and comfort-driven home features remain high on buyers’ wish lists, including:
- Open-concept great rooms
- Laundry rooms and ample garage storage
- Drinking water filtration systems
- Special kitchen storage for wine and spices
- Primary bathrooms with both a shower stall and tub
- Pull-out shelves for improved kitchen organization
As home buyers navigate affordability constraints, their priorities are shifting toward efficient, stylish, and highly personalized living spaces. The trend toward smaller yet better-designed homes is reshaping the housing market in 2025, proving that when it comes to homeownership, quality beats quantity.
Additional information on home buyer trends can be found in NAHB’s What Home Buyers Really Want, available at www.builderbooks.com.
About NAHB
The National Association of Home Builders is a Washington-based trade association representing more than 140,000 members involved in home building, remodeling, multifamily construction, property management, subcontracting, design, housing finance, building product manufacturing and other aspects of residential and light commercial construction. NAHB is affiliated with 700 state and local home builders associations around the country. NAHB’s builder members will construct about 80 percent of the new housing units projected for this year.
