U.S. Birth Rate Slump Raises Red Flags for Future Housing Market

U.S. birth rates have fallen to 1980s levels despite a population increase of 108 million people, an eyebrow-raising new report from John Burns Research and Consulting shows.

There were 3.6 million births in 2024, according to the Centers for Disease Control and Prevention, the same as in 1983. This, despite the significant population increase.

And the fertility rate has dropped to 1.6 babies per woman, according to the CDC’s National Center for Health Statistics, putting the U.S. on par with most European countries.

What low birth rates mean for housing trends

“The most immediate effect will be fewer bedrooms needed for children, while the longer-term impact will be slower growth in potential renters and homebuyers,” John Burns economist Eric Finnigan tells Realtor.com®.

While seven bedrooms might be the new four for select and wealthy enclaves, the average American will be downsizing.

“Today’s housing market is out of reach for many would-be buyers, which has shifted demand towards smaller, more affordable homes,” agrees Realtor.com senior economic research analyst Hannah Jones. “Additionally, younger generations may prefer homes in more central, walkable locations, and these areas tend to offer smaller homes.”

While empty nesters and retirees will number 14 million-plus of the homebuyer segment by 2034, the typical entry level buyer, ages 30 to 44, will only number 3 million, according to the John Burns report. Not only that, 73% of recent buyers did not have a child under the age of 18 in their home, the highest share recorded.

National Association of Realtors® deputy chief economist Jessica Lautz said that buyers with children are at an all-time low. “So, they may not need that three-bedroom, two-bath home. They may really want a two-bedroom, one-bath home, and that’s not necessarily the inventory that’s out there,” she says.

Additionally, the low birth rate will be a boon for landlords as more people rent and for much longer.

“Americans are waiting significantly longer to purchase homes,” says Finnigan.

The typical first-time homebuyer is now 38 years old, compared with 33 only five years ago, and an average of 31 from 1993 to 2018, says the John Burns report.

Of course, waiting longer to buy a house isn’t all because of fewer babies to house.

The skyrocketing costs of homeownership—from the national median list price being an eye-popping $440,950, to the soaring price of insurance, utilities, and property taxes, and to stubbornly high interest rates—has a lot to do with it as well.

What Americans are doing instead

This delayed homeownership creates increased rental demand, with 72% of renters now age 30 or older—an all-time high, says the John Burns report.

“Renting is an increasingly favorable option, especially as buying a home remains prohibitively expensive. It is more affordable to rent than to buy in the vast majority of large U.S. metros, tipping the scales towards a renting preference,” says Jones.

Buyers who are in the market for homes are looking for smaller, older housing stock that will be more affordable and match more with their small-family lifestyles. New construction tends to build larger.

For the second quarter of 2025, the median square footage of a new construction home is 2,044 and for existing homes it’s 1,794 square feet, according to Realtor.com data.

In the first four months of 2025, newly constructed home sales numbers decreased over 20% per month, according to Cotality data.

New homes now make up 12% of all home sales, a decline from 16% in early 2024. This shift is reflected in prices; since 2023, existing homes have appreciated 11%, but new homes have only appreciated 6%, Cotality data show.

And beyond buying older homes, Americans are buying and thinking smaller. After all, no need for that gargantuan McMansion with only 1.6 kids.

Buyers are asking for homes of 2,076 square feet in 2023 versus 2,260 square feet two decades ago, says a NAR poll.

“This trend toward a smaller size is even apparent in new builds,” says the Cotality report. “Years of rising costs—for homeowners and for homebuilders—have weighed on home square footage.”

The size of newly constructed homes fell 10 square feet per year over the last five years, according to Cotality’s analysis.

Savvy homebuilders will give the people what they want.

Unlike a lot of builders that focus on larger homes to maximize their profit, HHHunt Homes doesn’t shy away from starter homes. The builder’s single-family Kinwick community homes in Richmond, VA, begin at a relatively small 1,270 square feet and max out at 2,943 square feet.

“We are listening to the community and what they need,” HHHunt Homes’ marketing manager Cara Munsey tells Realtor.com. “The smaller and more affordable homes are what people want.”

Jones agrees. “New construction has shifted towards smaller, more affordable homes as builders look to capture shifting buyer preferences and affordability constraints,” she says. “Many metro areas are exploring zoning changes to allow for more densely built housing, which would also shrink the typical size of newly built homes.”

Older, smaller homes on the market

Smaller turnkey homes priced affordably in hot markets won’t be active for long.

Take this two-bedroom, fully remodeled 920-square-foot house in Fresno, CA, listed at $200,000 in a market where the median price tag is $469,917. It took less than two weeks to find a buyer.

The agent, Enrique Ruiz-Sanchez of Rise Realty, tells Realtor.com that the house had 80 showings in two weeks, 10 offers, and sold for $70,000 above-ask.

“Price below market, get the bids going, that’s my strategy,” he says. “If you saw a Mercedes on sale for $10, you’d want to buy it, wouldn’t you?”

What’s accounting for the low birth rate?

Americans are worried about multiple factors in terms of having children, including finances, health insurance, parental leave and affordable child care, Karen Guzzo, director of the Carolina Population Center at the University of North Carolina, told the Associated Press.

“Worry is not a good moment to have kids,” she said.

Women are also bearing their first child much later than in years past, with the average starting age being 30.

Mothers in the 1970s and early 1980s typically had their first child in their early to mid-20s, says the John Burns report.

“This trend is connected to more women attending college and getting married later,” says Finnigan.

Birth rates also slowed rapidly during the pandemic, before experiencing a mini-baby-boom in 2022, then declining again.

Concerned by the slowing birth rates, the Trump administration has floated the idea of reduced costs for in vitro fertilization and a cash bonus for baby birthers.

But polls say these so-called solutions ignore the fundamental fears over long-term child care costs, according to a survey by The Associated Press-NORC Center for Public Affairs Research.