The people who are buying a home are likely the same people who are working from home. The requirement of an effective office room necessitates a larger home than maybe they would have bought in the before-times. If two people in the household are working from home, maybe even larger still.
During the first year or so of the pandemic, I shared a small room, converted to an office, with another member of my household, and a third person had a desk just outside the door. It was not ideal. Fortunately, it was only temporary, but if that was the new normal, I would absolutely be looking for a larger house.