First-time homebuyers often want starter homes. Let’s look at what defines a starter home, who buys them, and the state of the new starter-home market.

The Size of Starter Homes

“Starter homes” are often defined as those under 1,500 square feet. Most new homes, however, are larger. According to U.S. Census data, the median size of a new single-family home in 2023 was 2,286 square feet.

However, the size of new homes overall is trending downward. According to Realtor.com, the median new home built in 2022 was 2,128 square feet. In 2024, that number fell to 1,965 square feet.

The Townhouse Trend

A significant part of this downward shift in home size lies in one sector: new townhomes. According to U.S. Census data, new townhouse construction jumped 23% from the second quarter of 2023 to Q2 2024, when nearly 15% of all single-family home starts were townhouses. The average size of a townhouse is about 1,500 square feet.

New Home Sizes Match What Buyers Want

While new-home construction is shifting in the direction of starter-home size, the majority of home buyers want larger homes. Builders are giving them what they want.

A National Association of Home Builders (NAHB) survey found that 21% of buyers in 2023 wanted homes between 1,600 and 1,999 square feet. That year, 22% of new single-family homes built were in that size range. In the next tier up, 38% of buyers wanted homes from 2,000 to 2,999 square feet; 40% of new single-family homes fell within that size range.

According to the NAHB, only 16% of buyers wanted single-family homes in the starter-size range, from 1,599 square feet to under 1,200 square feet. In 2023, first-time homebuyers made up 32% of the market share. That means close to half of all first-time homebuyers wanted houses bigger than starter size.

New Homes Can Be More Affordable Than Older Ones

What about existing homes? They’re often pricier by the square foot.

Zillow data shows that in May 2024, new homes in the U.S. were sold for an average of $3.50 less per square foot than existing ones. The savings were greater in Dallas, where the price per square foot of new homes was $9.90 less than existing homes.

Whether you’re looking for a starter house or something larger, our team can help you find the home that’s perfect for you. Call at (972) 591-3097 or connect with us online.