Impact of Affordability Challenges and Demographic Shifts on Housing Trends in 2026

Housing affordability has declined significantly in recent years. The deterioration in price-to-income ratio has been a key factor, as home prices have risen 53% since 2019, while median household income has risen only 24%. This has notably decreased the share of first-time home buyers in the market, which dropped to 21% in 2025 from 44% in 1981. Over that same time frame, the median age for first-time buyers reached a record high of 40 in 2025 from 29 in 1981.

Other milestones are shifting as well, with more than half of young adults ages 18 to 24 living with their parents, fertility rates and the percent of married couples with children decreasing, and more people opting to live alone.

“You can’t have housing prices rise that significantly for a sustained period of time and not experience housing affordability issues,” said Rose Quint, NAHB assistant vice president of survey research. “Clearly this will have implications on the size of homes we build and the types of amenities we include.”

Median home size leveled off at 2,155 square feet in 2025, essentially unchanged from 2,150 in 2024. Although size is not expected to change significantly in 2026, builders do expect to incorporate more transition or flex spaces, such as drop zones and multiple purpose rooms, and electrical vehicle (EV) charging stations. Builders are also trying to address affordability concerns by offering sales incentives (67%) and cutting home prices (41%), a trend that continues to grow compared to efforts in 2024.

As entry-level buyers look to enter the market, their interests match their budget expectations compared to high-end buyers, with the latter often preferring more bedrooms, bathrooms and home offices. Other features sought more by high-end buyers include:

• Above-standard certifications (e.g., energy efficiency, indoor air quality, water efficiency, etc.),
• Special kitchen storage spaces,
• Soundproof walls and floors,
• Technology systems (e.g., lighting control, energy management, home security, etc.), and
• Community features (e.g., jogging trails, walkways, parks, retail shopping nearby, etc.)

One feature that all buyers desire — and that can help builders expand the living space of a home even with a smaller footprint — is outdoor amenities.

“People want to be out, they want to be mobile, they want to be a part of their community,” stated Don Ruthroff, founding principal at Design Story Spaces. “It’s all part of wellness, which is a huge trend.”

Whether it’s incorporating a rooftop deck in an urban setting or a patio to elevate a suburban backyard, builders have a number of options to maximize even 10 feet of space to allow home buyers to enjoy the outdoors. This translates to community amenities in multifamily as well, with a shift away from larger clubhouses and pools toward utilizing natural landscape features and incorporating parks and trails.

Builders are also adapting elevation designs to match strong interests in both traditional (preferred by 50% of entry-level buyers) and contemporary (preferred by 57% of high-end buyers) styles. This can be helpful in ensuring that the style matches the local community, especially for more suburban developments.

“When you’re thinking about elevation design, it needs to feel authentic to the style,” Ruthroff added.

Other creative ways builders are addressing the housing affordability and supply concerns include:

• Adaptive reuse (e.g., commercial buildings or schools re-envisioned as housing)
• Mixed densities, such as townhomes and condominiums, to provide multiple options for buyers

Additional information on home buyer trends can be found in NAHB’s What Home Buyers Really Want, available at builderbooks.com.