Doug Immel recently completed his custom-built dream home, sparing no expense on details like cherry-wood floors, cathedral ceilings and stained-glass windows -- in just 164 square feet of living space including a loft.
The 57-year-old schoolteacher's tiny house near Providence, R.I., cost $28,000 -- a seventh of the median price of single-family residences in his state.
"I wanted to have an edge against career vagaries," said Mr. Immel, a former real estate appraiser. A dwelling with minimal financial burden "gives you a little attitude." He invests the money he would have spent on a mortgage and related costs in a mutual fund, halving his retirement horizon to 10 years and maybe even as soon as three. "I am infinitely happier."
Dramatic downsizing is gaining interest among Americans, gauging by increased sales of plans and ready-made homes and growing audiences for websites related to the niche. A+E Networks has begun airing "Tiny House Nation" a series on FYI that "celebrates the exploding movement."
The pared-down lifestyle allows people to minimize expenses and gain economic freedom, said architect Jay Shafer in Cotati, Calif., who founded two micro-building and design companies and is widely credited with popularizing the trend.
"It shows people how little some need to be happy, and how simply they can live if they choose," said Mr. Shafer, 49, who shares a 500-square foot home with his wife and two young children.
Despite gains in the labor and housing markets, Americans choosing mini-houses remain wary of tethering themselves to a mortgage.
People want "a more modest lifestyle now," said Derek Diedricksen, who travels nationally to lead building workshops. Those who opt for super-small structures don't want to "waste their time or be a slave to a house they don't fully use."
Defined as 500 or fewer square feet, tiny houses range from primitive 96-square-foot huts to award-winning displays of sustainable architecture with elegant streamlined design. While many are built on wheels to avoid regulations, mobility isn't the main draw.
Aldo Lavaggi, 36, can support himself as a folk musician in New York's Hudson Valley thanks to the 105-square-foot home he built on a friend's farmland in the Berkshires and has lived in since August 2012. His residence runs on a car battery and energy from two solar panels. He pockets enough cash to splurge on artisanal bread and gourmet cheeses from the local market. "I'm earning more than I spend," he said.
Even with the micro-trend, the number of tiny houses in the United States is, well, tiny -- just in the thousands per unofficial industry surveys. Their popularity is growing, however, as the U.S. homeownership rate has fallen to 64.8 percent, the lowest in almost 20 years, and the median size of new single-family houses is the biggest ever -- 2,384 square feet in 2013, a 3.4 percent increase from 2012.
Historically, residences under 500 square feet weren't considered "tiny." In 1950, houses averaged 983 square feet, according to data from the National Association of Home Builders. The first units in the iconic early American suburb of Levittown, N.Y., on Long Island, were 750 square feet.
Some advocates are refugees from the recent real estate bust. Macy Miller's 2,500-square-foot Idaho home was foreclosed on in 2007, following her divorce.
In 2011, Ms. Miller literally took matters into her own hands, building a 196-square-foot timber home on a trailer in Boise, Idaho. She completed it in 18 months for $11,000 with zero debt, pays $200 a month to rent the land and shares the space with her partner, their baby and a 100-pound Great Dane named Denver.
The largest share of inhabitants, 23 percent, are between ages 31 and 40, according to "The Tiny Life" blog, which surveyed more than 2,600 dwellers in the U.S. Almost 90 percent said they had at least some college education and 61 percent had zero credit-card debt.