Each square foot of space now costs more than ever before, thanks to sky-high prices and soaring mortgage rates. Buyers are making concessions by purchasing smaller homes.

Americans are buying smaller homes than they did during the pandemic's peak. The average U.S. home under contract in March was 1,720 square feet, down 1.8 percent from 1,751 square feet at the same time last year and nearly the same size as homes selling right before the epidemic began.

The information in this report is derived from Redfin's weekly home market statistics. The term "March" refers to the four weeks ending April 10, 2022 in the opening paragraph of this report. We looked at the median square footage of houses that were under contract during the relevant time periods in all of the metros covered by Redfin to establish the normal size of homes people are buying nationwide.

"Buyers are buying smaller homes because the larger the home, the more costly it is," Redfin Chief Economist Daryl Fairweather explained. "Even while there are indicators that the housing market is cooling, it remains tough for purchasers on a budget to find what they want in a home." This is due to the fact that there is still a very limited supply of homes for sale, as well as sky-high prices for those that are available and rising mortgage rates. If purchasers are unwilling to compromise on location, they will most likely have to settle for a smaller property."

With the pandemic-driven surge in homebuyer demand, housing prices have risen in the last year, costing more per square foot than ever before. In March, the median home-sale price in the United States jumped 17.3 percent year on year to an all-time high of $413,000, while the median price per square foot increased 20.1 percent to a record $230. Rapidly rising mortgage rates are compounding high housing costs, with the average monthly mortgage payment on a median-priced property increasing by 35% year on year.

Homebuyers are also returning to condominiums, which were in short supply at the start of the outbreak. The resurgence of condominiums, which are generally smaller than single-family houses, is one reason contributing to the decreased square footage of residences for sale. Furthermore, purchasers have begun to appreciate shared facilities and walkable areas again–and the return of in-person employment and education means they don't want as much room.

When the epidemic began, Americans began purchasing larger homes in order to accommodate remote employment, homeschooling, and social isolation. In the four weeks ending March 15, 2020, just before the pandemic began to affect the housing market, the average house sold was 1,713 square feet. It then soon soared to a peak of 1,791 square feet in June 2020, the most since at least 2015.