The American Dream is not a static concept. It’s easily influenced.
After the Civil War, the dream was to not work for others (that was viewed as akin to slavery.) Then the Industrial Revolution started and in a matter of a decade, the American Dream became to have a job. After WWII, we were persuaded to want a suburban home that looked like all those around it, 2.5 kids and a dog were what we should want. In the booming 1990’s with shows like Lifestyles of the Rich and Famous, McMansions exploded on the landscape. The size of the home even middle class people live in has ballooned, with commensurate impacts on the environment. (In 1940 the average home was 1177 sq ft and likely housed 6 people; by 2014, the average home was 2657 sq ft, often housing only 2 people.)
But maybe the pendulum is swinging back. Tiny houses are cool (although far from common.) There is some indication that smaller homes are becoming popular again. And of course, many urban Millennials figure they’ll never be able to afford one and don’t even want a car.