Single-Family Home Builders NAICS 236115

Jun 9, 2025 - Despite Homes Getting Smaller, Unaffordability Persists

• While home sizes have shrunk since before the pandemic, home prices have increased significantly, postponing home purchases for many would-be first-time buyers, according to The Wall Street Journal. Between February 2020 and December 2024, the median size of a new home has dropped by about 50 square feet, according to real estate data firm Cotality. Over the same period, the median price of a starter home has risen 44% to $287,000. However, downsizing homes doesn’t necessarily translate into significantly lower building costs. Lot prices and permitting costs change little as homes get smaller, and some building costs have seen double-digit percentage increases over the past year, further pinching builder margins.
• US residential construction spending declined in April compared to March amid a reduction in the number of new single-family developments and rising inventories of unsold new homes, according to Reuters. In a Reuters survey of property industry experts, 90% of respondents believed the Trump administration’s tariff policies would drive up costs and result in fewer homes being built. A housing strategist with Morgan Stanley said, "Looking ahead through the rest of this year and into 2026, we don’t expect mortgage rates to come down much — at least not through the third quarter of 2025 — so affordability will remain pressured.”

• In late May, Immigration and Customs Enforcement (ICE) officers raided three construction jobsites in New Orleans; San Antonio, Texas; and Tallahassee, Florida, according to Construction Dive. Some industry insiders told Construction Dive that increased jobsite immigration enforcement could disrupt project schedules and worsen the construction industry’s labor shortage. The Associated General Contractors of America (AGC) has been advising its members to expect an increase in jobsite enforcement, as it has estimated it would take about five months for the Trump administration to organize and ramp up enforcement. The Associated Builders and Contractors (ABC) trade group has suggested that its members ensure their workers are authorized to work in the US. The Trump administration claims that increased immigration enforcement is necessary to ensure national security and protect jobs for workers who can work in the US legally. The ABC says that for 20 years, it has called on Congress to pass a market-based merit visa program to allow more foreign workers to be employed in the US.
• The price gap between new and existing homes is narrowing, according to National Association of Home Builders analysis of US Census Bureau data. In the first quarter of 2025, the median price for a new home was $416,900, only $14,600 more than the median existing home price. In Q1, the median price for a new home declined 2.32% year-over-year; the median price for an existing home rose 3.38% over the same period. The average price difference between new and existing homes over the last five years is $26,700 and over 10 years it’s $66,000. The price gap between new and existing homes has been closing as tight inventories of existing homes have pushed up prices. At the same time, builders have reduced lot and home sizes and offered incentives to attract buyers.