Homebuyers at open houses often rave about fancy kitchen appliances, landscaped yards, and walk-in closets. But hallways? It’s hard to imagine anyone raving about the floor space that connects one room to another.

That is why designers are increasingly eliminating hallways in new-build homes to make them more affordable.

“Rather than shrinking rooms to reduce the overall size of the home, a common tactic among our architectural designers has been to eliminate unnecessary circulation space,” explains a new report on residential design from California-based John Burns Research and Consulting.

The trend is all about creatively maximizing the areas that homeowners actually care about — and skipping features that mostly just take up space and add to the overall cost. For example, builders might place a shared closet between two bedrooms that would otherwise be connected by a wall.

New-build homes are smaller (and cheaper)

Anyone who has been around the housing market lately knows that homes are overpriced and there are too few for sale. Conditions have only become more challenging since the Federal Reserve began raising interest rates in 2022, simultaneously increasing costs for homebuyers (who will face higher mortgage payments) and builders (who will face higher interest rates on construction loans).

To close the affordability gap, homebuilders have reversed the trend of building larger homes and instead focused more on smaller, more affordable homes.

A survey from the National Association of Home Builders found that 38% of builders were building smaller homes in 2023, and 26% said they would downsize even further in 2024. Here’s what the market is asking for: “Homebuyers are looking for homes around 2,070 square feet, compared to 2,260 20 years ago,” the survey explains.

Typically, buyers pay a premium to get their hands on a newly built home that (theoretically) needs no renovation. However, research shows that the typical new home is now cheaper than its existing counterpart.

According to Federal Reserve reports, the median sales price for brand-new homes in the U.S. was $417,400 in May, compared to $419,300 for existing homes. Median prices for new homes have also fallen significantly from their record high of $460,300 in October 2022.

Keep in mind that more than 90 percent of home sales are existing homes, according to the National Association of Realtors. So the price data for new homes is based on a much smaller sample. Additionally, new homes are often built in areas where land is readily available and affordable, rather than in cities where real estate costs a fortune and the best lots have already been developed.

The most obvious reason that existing homes are more expensive than new construction “is the continued appreciation of existing home values ​​due to inventory shortages,” said Cliff Johnson, vice president of new homes and rentals at Realtor.com, in a recent note. At the same time, builders are responding to the market and emphasizing design choices that lower costs.

“Builders have seen the affordability issue coming for some time, so many have adapted and responded with more reasonably priced homes,” he added.

This article originally appeared here and has been republished with permission.