I read a story from the National Association of Home Builders using Census data found that in 1999 37% of newly built single-family homes in our country had square footage of less than 1800. By 2015, just 21% of new single-family homes were this small. In 2018, 23% of new single-family homes were this small.
According to the U.S. Census Bureau by 1989 the average new single-family home had over 2,000 square feet of living space and by 2015 the average new single-family home had 2698 square feet. Thus, the "starter" home has been big enough since 1989 for most families to live and raise their kids in over decades. Thus, they stay put longer in their homes as most families have no need to move up to a larger home. Thus, we have fewer homes to sell.