New Homes are Costing More to Build

Single-family home construction costs are at the highest levels since 1998, according to a new report by the National Association of Home Builders. Costs were significantly higher in 2013 when compared to 2011 average construction costs—$246,453 in 2013 versus $184,125 in 2011. 

Framing and trusses account for the largest share of construction costs, and a rise in the cost of lumber is most likely to blame, the NAHB report notes. The cost of softwood lumber rose 40 percent between April 2011 and April 2013, according to the Bureau of Labor Statistics’ Producer Price Index.

“Although lot sizes are shrinking, both the cost and size of the home are on the rise,” Heather Taylor of NAHB’s Economics and Housing Policy group notes in the report. The average home in 2013 was built on 14,359 square feet (or about at third of an acre) of land, the report notes. The average home boasted 2,607 square feet of finished area.

NAHB broke down the cost of construction on new single-family homes into the following eight major stages of construction:

• Interior finishes account for 29.3% of construction costs 
• Framing: 19.1% 
• Exterior finishes: 14.4% 
• Major system rough-ins: 13.4% 
• Foundations: 9.5% 
• Site work: 6.8% 
• Final steps: 6.6% 
• Other costs: 0.9% 

Source: “Cost of Constructing a Home,” National Association of Home Builders (Jan. 2, 2014)