Smaller, Smarter, and Outdoor-Oriented: How Manufacturers Are Adapting to Changing Consumer Tastes
As affordability challenges and demographic shifts impact what is desirable and attainable for home buyers, builders are quietly reshaping what the “normal” home looks like in America.
New data from the National Association of Home Builders reveals some clear patterns: Homes are getting smaller, floor plans are more efficient and feature-packed, and outdoor living spaces are now outpacing low-efficiency utilities.
“They are also small for sex. Floor plans are getting smaller and smaller, but in that being smaller, they have to be more crowded. They have to be more attractive. They have to use the space better,” Donald J. Ruthroffarchitect in the San Francisco Bay Area, said at the launch of the International Builders Show in Orlando, FL, on Wednesday.
During the session, Rose Quintassistant vice president for survey research at NAHB, said that while new homes are shrinking from their pre-pandemic highs in terms of square footage, builders are adding more features in response to consumer preferences.
According to NAHB’s analysis of Census Bureau data, the average new home size was about 2,155 square feet in 2025, down about 300 square feet from 10 years ago, when the average home was 2,475 square feet.
Buyers are also increasingly gravitating towards three-bedroom homes. By 2025, 47% of new homes had three bedrooms, marking the highest share since 2011.
Meanwhile, the share of new four-bedroom homes fell to 32%. Bathrooms are similarly changing: 65% of new homes now have just two full baths, while the three-bath share is shrinking.
These changes reflect both affordability barriers and the changing demographics of homebuyers, with more single-person households, fewer multi-child families, and the average age of both marriage and homeownership continuing to rise.
Key home features for entry-level versus high-end buyers
Quint’s consumer research shows a big difference between what consumers consider non-negotiable.
High-end or premium buyers, says Quint, “need it.” They rated 69 different features as “most wanted” (indicating that more than 75% of respondents saw them as important) across kitchens, green features, technology, outdoor areas, and special rooms such as home offices.
“We’ve offered these buyers more than 200 home and community features, and what we’ve found is that high-end buyers have a very strong preference for a wide range of features,” Quint said.
Entry-level buyers, in contrast, are less demanding, rating only a few features as important.
“Your entry-level buyer understands their situation better. In this group, there are only 18 of the most important, must-have features,” says Quint. “Everything else is negotiable. They want an affordable home.”
The entry-level buyer’s essentials are basic and functional, focusing on things like eat-in kitchens, patios, laundry rooms, garage storage, and a few energy-efficient upgrades like Energy Star-rated appliances.
Many “nice-to-haves”, such as smart home systems or unusual finishes, come off the list if they can push the price of a home into reach.
Yet one feature is considered essential at all price points: a full bathroom on the main level. First-time and high-end buyers say it’s important, whether it’s aging in place, multi-generational living, or comfort in hosting a guest.
“If you’re a builder thinking about cutting out a full bath on the main level to save money … I would recommend that you think about that as well, because first-time home buyers, high-end buyers, and really high-end buyers, want a full bath on the main level,” Quint said.
The outdoor area becomes a second living room
As interior floor plans tighten, exterior spaces are where many builders add value, and it’s another area where consumer preferences are consistent across all income levels.
NAHB survey data shows both high-end and high-end buyers strongly prefer homes with balconies,
front porches, decks, back porches, landscaping, and outdoor lighting.
“External factors are important for both groups of people,” says Quint. “That’s where I can focus any extra money you might have, on adding some of these features to the home.”
On the design side, Ruthroff argued that the outdoor space has become a second living and dining space for families, and he said that home builders should treat it as such, even in small spaces.
For model homes, that means fully providing common backyards, side yards, and porches to show how they can function as everyday living spaces.
“I encourage you to really decorate it, show people that that little place is still incredibly useful, because they want it,” said Ruthroff. “Now it’s a second residence. Now it’s a second restaurant. So they want that, so make sure they see it.”
In dense urban projects, where backyards are scarce, rooftop decks are increasingly the answer. From rental communities in Tempe, AZ, to new multi-family housing and multi-family projects in cities like Sacramento, CA, and Nashville, TN, rooftop terraces now accommodate pools, lounges, dog runs, and social gathering spaces.
“You see how important roof space is in an urban environment,” Ruthroff said. “It’s expensive, I know, but it’s important that when you get into a crowded situation you keep thinking, ‘How do I get my homeowners out?'”
‘Smaller and better’ floor plans
Inside the home, builders are adapting to shrinking floor plans by making each square foot work harder.
Instead of long hallways or overly large formal rooms, modern plans favor great rooms, L-shaped living and kitchen layouts, and compact but functional kitchens with islands and walk-in pantry.
“Work before the show,” says Ruthroff. “The idea that the kitchen is a showcase is important, but it really has to be functional, because in many cases it’s smaller than before. So it needs to do more.”
For buyers, the net result is a clear departure from raw size and underutilized formal rooms, with more emphasis on function, storage, and smart architecture that fits both how people live and what they can realistically afford.
