Smaller floorplans cost less to build, use fewer resources, and run on a lot less energy over the span of decades. Will people buy them?
If there’s a proverbial elephant in the room at every model home center, it’s the matter of square footage. Many buyers walk in the door with a baseline template they want: three bedrooms, three baths, three-car garage—are we sensing a trend here?
Smaller floorplans cost less to build, they use a lot fewer resources and they run on a lot less energy over the span of decades.
The higher the average square footage cost to build a home, the greater the potential upfront savings with a smaller plan.
Smaller homes use less energy for heating, cooling, lighting, and hot water. Based on U.S. Department of Energy (DOE) data and real-world utility analysis:
On average, a new 2,200-square-foot energy-efficient home may use ~11,000–13,000 kWh/year. An 1,800-square-foot equivalent may use ~9,000–10,500 kWh/year. If you assume $0.14 per kilowatt hour (kWh) (based on national average), the energy savings = 1,500 to 2,500 kWh/year or an annual savings = $210 to $350/year.
And in hot climates where A/C is the dominant load? That gap can widen, especially with radiant barriers and efficient design. Smaller homes also offer lower long-term maintenance, including:
Less roofing to replace over time.
Fewer opportunities for plumbing failures over time.
Less repainting and maintenance of exterior siding.
Lower cleaning and upkeep burden.
Put into real numbers, you could tell would-be buyers to expect to save $200 to $400 a year in reduced maintenance and repair costs, depending on usage and materials—and that’s a modest estimate.
Who will buy?
There’s a misconception that smaller houses won’t sell. The reality is that home sizes have already downshifted since 2020, averaging about 200 square feet less than they did prior to the pandemic.
Recent trends indicate a shift toward smaller homes. In the past five years, the average home size listed for sale has decreased by 7 percent, from 1,926 square feet in March 2020, to roughly 1,800 square feet in March 2025. This trend is attributed to rising inflation, high interest rates and soaring construction costs, making larger homes less affordable for many buyers.
Take the case of Indigo, a new development in Richmond, Texas:
According to Chron.com, the first phase of Indigo includes 16 cottages, ranging from 950 to 1,400 square feet, built by Empire Homes. Those sold in 45 days, partly due to the competitive price point, with one of the cottages initially selling for $219,000—a price practically unheard of in the Houston area under the current market.
The development also features “duets,” or duplexes, which have already sold out. This makes them the second-most popular option. Interestingly, Scott Snodgrass, founding partner of Meristem Communities—another Indigo builder—has seen that about a quarter of these buyers are intergenerational families or close friends.
One pushback against smaller floorplans is that they’re just offering less for the same price.
Realtor.com notes that one way homes are reducing in size is by “giving up” hallways. That may be true, but when smaller homes are sold as part of a theme, with emphasis on their efficiency, attention to context (such as the Indigo example) seems to compensate for any perceived reduction in amenities.
Also, less-palatial homes offer even greater long-term cost savings for owners than lower maintenance. Reducing square footage is one of the few ways to mitigate property taxes, for example.
In addition, many insurance companies offer premium reductions for certain features, including:
Leak detection systems
Rafter hurricane clips
Impact-resistant roofing
Security systems
Fire and smoke alarms and sprinkler systems
Just these two expenses alone are major resilience factors that are especially appealing to those on fixed incomes.
Size and the ‘Jones’ Factor
According to research by Clément Bellet, one key to getting buyers to embrace smaller homes is not trying to wedge them in around larger product. He found that when bigger houses get built closer to smaller houses, house satisfaction is lower among the smaller households.
This line of research suggests that the perceptions of optimal home size are at least partly rooted in comparison with the Joneses—not necessarily a “real” consideration of comfort or discomfort.
Couldn’t we take this line of reasoning to its logical conclusion? If you build small, and surround small homes with other small homes, residents will be happier with smaller spaces.
Veteran journalist Matt Power has reported on innovation and sustainability in housing for nearly three decades. An award-winning writer, editor, and filmmaker, he has a long history of asking hard questions and adding depth and context as he unfolds complex issues.
Shifts in Housing Size
Smaller floorplans cost less to build, use fewer resources, and run on a lot less energy over the span of decades. Will people buy them?
If there’s a proverbial elephant in the room at every model home center, it’s the matter of square footage. Many buyers walk in the door with a baseline template they want: three bedrooms, three baths, three-car garage—are we sensing a trend here?
Smaller floorplans cost less to build, they use a lot fewer resources and they run on a lot less energy over the span of decades.
The higher the average square footage cost to build a home, the greater the potential upfront savings with a smaller plan.
Smaller homes use less energy for heating, cooling, lighting, and hot water. Based on U.S. Department of Energy (DOE) data and real-world utility analysis:
On average, a new 2,200-square-foot energy-efficient home may use ~11,000–13,000 kWh/year. An 1,800-square-foot equivalent may use ~9,000–10,500 kWh/year. If you assume $0.14 per kilowatt hour (kWh) (based on national average), the energy savings = 1,500 to 2,500 kWh/year or an annual savings = $210 to $350/year.And in hot climates where A/C is the dominant load? That gap can widen, especially with radiant barriers and efficient design. Smaller homes also offer lower long-term maintenance, including:
Put into real numbers, you could tell would-be buyers to expect to save $200 to $400 a year in reduced maintenance and repair costs, depending on usage and materials—and that’s a modest estimate.
Who will buy?
There’s a misconception that smaller houses won’t sell. The reality is that home sizes have already downshifted since 2020, averaging about 200 square feet less than they did prior to the pandemic.
Recent trends indicate a shift toward smaller homes. In the past five years, the average home size listed for sale has decreased by 7 percent, from 1,926 square feet in March 2020, to roughly 1,800 square feet in March 2025. This trend is attributed to rising inflation, high interest rates and soaring construction costs, making larger homes less affordable for many buyers.
Take the case of Indigo, a new development in Richmond, Texas:
According to Chron.com, the first phase of Indigo includes 16 cottages, ranging from 950 to 1,400 square feet, built by Empire Homes. Those sold in 45 days, partly due to the competitive price point, with one of the cottages initially selling for $219,000—a price practically unheard of in the Houston area under the current market.
The development also features “duets,” or duplexes, which have already sold out. This makes them the second-most popular option. Interestingly, Scott Snodgrass, founding partner of Meristem Communities—another Indigo builder—has seen that about a quarter of these buyers are intergenerational families or close friends.
One pushback against smaller floorplans is that they’re just offering less for the same price.
Realtor.com notes that one way homes are reducing in size is by “giving up” hallways. That may be true, but when smaller homes are sold as part of a theme, with emphasis on their efficiency, attention to context (such as the Indigo example) seems to compensate for any perceived reduction in amenities.
Also, less-palatial homes offer even greater long-term cost savings for owners than lower maintenance. Reducing square footage is one of the few ways to mitigate property taxes, for example.
In addition, many insurance companies offer premium reductions for certain features, including:
Just these two expenses alone are major resilience factors that are especially appealing to those on fixed incomes.
Size and the ‘Jones’ Factor
According to research by Clément Bellet, one key to getting buyers to embrace smaller homes is not trying to wedge them in around larger product. He found that when bigger houses get built closer to smaller houses, house satisfaction is lower among the smaller households.
This line of research suggests that the perceptions of optimal home size are at least partly rooted in comparison with the Joneses—not necessarily a “real” consideration of comfort or discomfort.
Couldn’t we take this line of reasoning to its logical conclusion? If you build small, and surround small homes with other small homes, residents will be happier with smaller spaces.
By Matt Power, Editor-In-Chief
Veteran journalist Matt Power has reported on innovation and sustainability in housing for nearly three decades. An award-winning writer, editor, and filmmaker, he has a long history of asking hard questions and adding depth and context as he unfolds complex issues.Also Read