🎈Home Prices Are Outpacing Inflation 🎈
The median sale price per square foot for new single-family homes has exceeded overall inflation by 139% since 2020.
Median Price per Square Foot by Metro Area | Metro Area Trends | Changes in Square Footage Over Time | How the Median Price per Square Foot Has Increased | Generational Realities | Methodology | FAQ
After hitting the highest annual rate since December 1981, inflation is still steadily on the rise — increasing 0.5% between May and June to 9.1%. Americans are feeling the crunch on their pocketbooks, and it’s affecting how they approach not only their everyday lives but their futures as homeowners.
The overall price of goods in America has risen 224% since 1980. As a result, home buyers are looking to maximize their purchasing power by examining just how much house they’re actually getting at market price. Now, more than ever, buyers truly want to know what houses cost per square foot.
The median sale price per square foot for new single-family homes has increased 310% since 1980. The typical American family can expect to pay about $169 per square foot of house, but depending on where they live, that number can grow significantly.
We’ve already found that raises in annual income are barely keeping pace with inflation. Since 2000, the overall price of goods in the U.S. has risen by 67%. After adjusting for inflation, however, the median American household income has increased by just 7% in the same time period. That’s only 0.3% per year.
Examining price per square foot is more important than in the past because housing prices are also outpacing income. We analyzed which major metro areas are least affordable and how price per square foot has changed over time. We examined data from the U.S. Census Bureau, the U.S. Bureau of Labor Statistics, and Realtor.com. Prices and square footage are based on the most up-to-date and comprehensive data from 2021.
|Price per Square Foot Statistics 👣
Median Square Footage of New Single-Family Homes (1980-2021)
The median square footage of new single-family homes has increased by 50% since 1980. Overall, median square footage has increased as the average number of people per household has slightly decreased within the same time frame.
The median square footage of a new single-family home is 2,356 square feet — 886 square feet more than 1980’s 1,570 square feet. The average household size is down from 2.76 to 2.51 people. That means the square footage per person is 949 square feet in 2021, compared to 1980’s 569 square feet per person.
Median Sale Price of New Single-Family Homes Not Adjusted for Inflation (1980-2021)
The median sale price of new single-family homes has increased 515% since 1980. In 2021, the median sale price was $397,100, compared to 1980’s $64,600. The rise in the median sale price has exceeded the rise in median square footage by 928% since 1980.
Compared with a more recent point in time, the rise in the median sale price of new single-family homes has exceeded the rise in median square footage by 1,705% since 2020.
The median sale price per square foot has also exceeded overall inflation by 139% in the past two years. If you’ve felt that housing prices have really jumped since the pandemic started, these numbers confirm your thoughts.
Adjusting Median Price per Square Foot for Inflation
Adjusting for inflation, the price per square foot of new single-family homes has increased just 24.6% from 1980.
To the average American, adjusting for inflation isn’t necessarily comforting because costs with inflation are what they actually have to pay. However, adjusting for inflation adds perspective on how prices have really changed over time.
After adjusting for inflation, the median sale price per square foot for new single-family homes has increased 13% since 2005, which was the peak of the “housing bubble” in the early 2000s.
Less comforting is the fact that, even when adjusting for inflation, the price per square foot of new single-family homes has increased 11% since 2020 alone.
Generational Differences in the Housing Market
Do kids these days actually have it easier? Nope! Boomers and millennials have experienced truly different housing markets.
Without adjusting for inflation, millennials entering their 30s face a 161% higher median sale price per square foot of house than boomers at the same age. This indicates that millennials are paying more for the same amount of space in their new homes.
To put it another way, boomers entering their 30s in 1985 could potentially purchase a 1,000-square-foot home for $53,020. For millennials entering their 30s in 2019, purchasing a 1,000-square-foot home would have cost them around $138,460.
Adjusting for inflation, millennials entering their 30s face a 9.65% higher median sale price per square foot of house than boomers at the same age. Even when adjusting for inflation, millennials are paying more than their parents’ generation on the housing market.
For a 1,000-square-foot home, boomers would have paid $132,840 in inflation-adjusted dollars in 1985, whereas millennials would have paid $145,660 in 2019. House prices have increased since 2019 as well, meaning millennials who decided to wait on purchasing a home are paying even higher prices.
Median Price per Square Foot by Metro Area
The high percent increase in housing prices per square foot means that the price of homes is increasing far more than the square footage. Folks living in cities that have seen large price per square foot increases are likely paying more for the same, or even less, space than in the recent past.
Trends across the 50 most-populous U.S. metros reflect this. Only three major metros — Cleveland; Memphis, Tennessee; and Baltimore — have seen price per square foot increases below the national average of 28% in the past five years.
These three cities, alongside Birmingham, Alabama, saw increases in both square footage and price.
Memphis saw the biggest increase in median square footage (19.2%) in the five-year time span we observed. It also has the largest median square footage at 2,630 square feet.
Metros other than these four saw decreases in the median square footage of homes over time.
The 50 Most-Populous Cities, Ranked by Price per Square Foot
The 10 Cities With the Highest Price per Square Foot
California has already gained a reputation for being an expensive state to live, but the numbers don’t lie. The top four most expensive cities based on price per square foot are in the Golden State.
San Jose, California, is the most expensive city in the country based on price per square foot at $801. It may come as a surprise that the most expensive city isn’t a larger metro, such as Los Angeles or even San Francisco. However, San Jose’s price per square foot is partially due to low inventory and high housing demand in the Bay Area.
The 10 Cities With the Lowest Price per Square Foot
The most affordable cities are spread across the U.S. That’s good news for remote workers looking to move to a more cost-effective region and want several options to choose from when relocating.
Memphis, Tennessee, is the least expensive city based on price per square foot at just $92 per square foot. Known around the world for its vibrant music scene, its competitive pricing may make it a go-to city for Americans trying to survive the current housing market while also wanting to find a thriving local culture.
The 10 Cities With the Largest Median Square Footage
Memphis, Tennessee, and Salt Lake City are the only metros with a higher median square footage than the median square footage for new single-family homes in the U.S. (2,356).
Don’t get distracted by a large median square footage, though. Some metros, such as Denver, with large median square footage come with a high price per square foot ($287).
The 10 Cities With the Smallest Median Square Footage
Many cities with the smallest median square footage are also some of the most expensive. This observation lends legitimacy to the “overpriced closet” insult that beleaguers many smaller housing units in pricey metros.
California cities, such as San Francisco and San Jose, feature steep prices but smaller square footage on average. These are not the cities for folks who are on a budget, but rather those who are looking to really indulge and invest in smaller, but potentially more lucrative, homes.
10 Cities With the Most Bang for Your Buck
In determining which metros provide home buyers with the best value, we looked at metros where price per square foot was lower than $200 while also having a median square footage of over 1,900 square feet. For comparison, the national medians are $169 per square foot and 2,356 square feet, respectively.
We chose $200 per square foot and 1,900 square feet because they capture the medians for the 50 most-populous metros and the U.S. as a whole.
In the below list, we include only metros that fit those parameters, ordered from lowest price per square foot to highest. The South dominates, which will come as no surprise to those who have noticed a shift from bigger cities in the West and Northeast to more affordable metros.
10 Cities With the Least Bang for Your Buck
For the lower-value metros, we looked at cities that have a price per square foot that’s greater than or equal to $200 while also having a median square footage of less than or equal to 1,900 square feet.
Unlike the “most bang for your buck” list, many of these cities are on the West Coast or in the Northeast.
These are the metros that fit those parameters, ordered from highest price per square foot to lowest:
Median sale prices and square footage of new single-family homes at the national level are retrieved from the U.S. Census Bureau’s most recent report of Annual Characteristics of New Housing Data, which includes data from 1978-2021.
For more recent home prices and square footage, and for a snapshot of the overall market in each metro area rather than just newly constructed single-family homes, we use Realtor.com’s historical housing inventory data. This includes data on the housing market that spans 2016-2021. This data set allows us to see what size homes are being posted for sale and for how much in each metro area, giving us a more precise idea of how this ratio changes over time, as well as the demand and market value for square footage at the metro level.
For an overall historical measure of inflation, we use CPIAUCSL, the Consumer Price Index for All Urban Consumers: All Items. CPIAUCSL is a measure of the average monthly change in the price for goods and services paid by urban consumers between any two time periods, made available by the St. Louis Fed.
Where your real estate voyage begins. Since 2014, Home Bay has helped thousands of readers confidently sail through their next home sale or purchase. In 2021, Home Bay was acquired by Clever Real Estate, a free agent-matching service that has helped consumers save more than $82 million on real estate fees. Research by Home Bay’s Data Center has been cited by The New York Times, CNBC, MarketWatch, NPR, Apartment Therapy, Yahoo Finance, Black Enterprise, and more.
More Research From Home Bay
Other Articles From Home Bay
Frequently Asked Questions
How do you calculate price per square foot?” ]
To calculate price per square foot, divide a home’s selling price by its square footage. For instance, if a 2,300-square-foot property is sold for $350,000, the price per square foot would be $152.
The San Jose, California, metro area has the highest price per square foot as of 2021 at $801 per square foot.
What is the average price per square foot in the U.S.?
The median price per square foot in the U.S. is $168.55.