Site Prep Contractors NAICS 238910

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.”

• So-called “missing middle” medium-density housing, which includes duplexes, townhouses, and other smaller multifamily properties, has gained in popularity over the last several quarters, according to the National Association of Home Builders. Multifamily properties in the missing middle (2 to 4 units) have generally been out of favor since the Great Recession, but they are experiencing a resurgence. In the first quarter of 2025, there were 5,000 construction starts for housing properties with 2 to 4 units, which was flat compared to a year earlier. However, over the past four quarters, the number of missing middle residential construction units reached 23,000, marking a 53% increase over the four quarters before that period. The missing middle segment’s gains may be limited absent zoning reform that allows for increased density.
• 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.