Expect fewer hallways and more nooks that work as "pocket offices" or kid-friendly alcoves in newly built homes.

Why it matters: Builders and architects say they're using every square foot of space as many shrink houses to cut costs.

• "All that Tetris we played in the '90s has finally paid off," experts at John Burns Research and Consulting wrote in a recent report surveying industry pros nationwide.

State of play: North Texas-based Cadence Homes is building townhouses under $400,000 with workstations tucked just off the kitchen.

• Listed for about $155,000, one of Lennar's brand-new homes in San Antonio offers 661 square feet of space — nearly all of which is open concept, except the primary suite and extra bathroom, which are tacked at the ends of each floor.

Reality check: Not everyone is eager to move in.

• "Why not just live in an RV at that point? No property taxes," one X user said about a 763-square-foot house, first reported by ResiClub, that Lennar is building in Fort Worth.
• It features two bedrooms that split off from a single hall, for under $200,000.

The big picture: Large homebuilders, including Arlington-based D.R. Horton, are churning out smaller houses, partly to attract first-time buyers prioritizing "affordability," the company's CFO Bill W. Wheat told analysts earlier this year.

By the numbers: The national median new home price held steady at $417,300 in June from a year earlier, Census Bureau data shows.

• Compare that with existing home prices, which recently hit a new high of $426,900, per the National Association of Realtors.

What's next: Starter homes might look cramped with tighter kitchens and outdoor spaces, John Burns Research and Consulting found.

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Over a third (38%) of U.S. builders say they constructed smaller houses last year, and 26% plan to go even smaller this year, according to the National Association of Home Builders.

State of play: The downsizing comes as high interest rates have hiked costs for both buyers and builders.

Flashback: Builders mostly focused on larger houses after the Great Recession, but more starter homes were developed between 2016 and 2020, according to the group's chief economist, Robert Dietz.

• The size of new single-family homes expanded briefly during the post-COVID construction boom, when people sought more space and interest rates were lower.

The bottom line: New homes built in 2023 measured the smallest median size in 13 years, the trade association found.

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