Strained affordability leads homebuilders to go smaller—just look at what Lennar is building north of Dallas

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In March, Lennar co-CEO Stuart Miller informed investors during their earnings call that there is ample demand for single-family new construction, provided it is offered at the right price point.

“The general theme remains primarily focused around very strong demand for housing, limited by the chronic housing shortage that is particularly problematic for working-class families and their ability to find affordable or attainable supply. Demand for that product remains robust if it can be built at an attainable price point,” Miller told investors.

One way that Lennar, a publicly traded homebuilder ranked No. 119 on the Fortune 500 list, is trying to unlock that housing demand is by building smaller homes. In pockets of Texas, they’re testing products to gauge just how small single-family buyers might be interested in going.

Jon Greany, managing partner at North Star Property Solutions, shared with ResiClub some images he captured of smaller homes being constructed by Lennar, located 43 miles north of downtown Dallas in a new community called Foree Ranch.

Let’s take a look.

The home above, which Lennar calls its Rincon model, features 3 bedrooms, 2.5 baths, and spans 1,376 square feet.

Lennar doesn’t currently list prices for the community, however, Greany believes it’s priced around $250,000 to $299,000.

“For an entry level buyer or someone downsizing into something lower maintenance it makes a lot of sense right now,” Greany tweeted on Wednesday.

In terms of small builds, this one isn’t that small compared to Lennar's Elm Trails community in San Antonio, TX. In that community, there were single-family homes at 661 square feet listed for $159,999.

And isn’t just Lennar.

Last month, D.R. Horton CFO Bill Wheat told investors on their earnings call that: “we have reduced the prices and sizes of our homes where necessary.”

According to Parcl Labs, the median square footage for new construction fell from 2,098 in 2022 to 2,036 in 2023. That 3% year-over-year decline marks the biggest single-year dip over the past 10 years.

Last week, ResiClub PRO members got these 3 additional articles:

Commercial real estate foreclosures up 117% over the past year

Navigating the lock-in effect: A closer look through two essential numbers

The lock-in effect has impacted every housing market across the nation

Later this week, ResiClub PRO members will receive an inventory update covering over 3,000 counties and 800 metros.