A new study from the home improvement website Fixr looking at housing “shrinkflation” says newly built homes are getting smaller but the cost to purchase them keeps going up.
In November 2025, the National Association of Realtors reported that the share of first-time home buyers in the United States had dropped to a record low of 21%. Analysts say the numbers underscore how hard it is for younger generations to build wealth through homeownership.
Chas Olson with South Dakota Housing says there’s no doubt affordability is a problem right now.
“The increased costs for materials, labor, land, that sort of thing, primarily make new construction loans less affordable. Now, for a first-time home buyer who’s primarily going to be looking at existing homes, factors like high interest rates probably have a greater impact on affordability.”
Olson says younger working adults who might think the market is out of reach need to look into assistance options and see if they’re eligible. He says it’s important to still have conversations about the dream of homeownership and the long-term investment gains.
“It really is thought to be a key factor to long-term financial success, and not just financial success, but kids’ success in school, people’s success at their workplace, all that. It all kind of ties in.”
Olson says market woes put pressure on some SD Housing programs, but they’re also coming off a year where they were able to help more than 2000 first-time home buyers, up from around 700 the year before. He thinks South Dakota is making good use of the $200-million approved by the state legislature in 2023 to stimulate more housing development and predicts the projects coming together will help with the affordability issue.
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