Shrinkflation is hitting homes: Expect ‘the death of the hallway’ and other Tetris-like designs to cut construction costs

(Credit: Getty Images—Allen J. Scaben)

Home prices keep going up, yet new homes keep shrinking—and architects say they’ll just keep getting smaller, according to a July report by John Burns Research & Consulting (JBREC). Last year, about a quarter of new homes were downsized to cut costs, JBREC says, yet new-construction home prices increased by 2.5% in 2023, peaking at nearly $441,000 in August, U.S. Census Bureau data shows. In turn, that’s led economists and other housing experts to warn of the death of the starter home. 

“To get a lower-priced home built under $300,000, you’ll either have to build a smaller home or homes in a higher-density setting,” Ali Wolf, Zonda’s chief economist, told Fortune’s Alena Botros in an interview last year.