Dive Brief:
- The National Association of Homebuilders released its latest Cost of Construction Survey, based on August 2015 responses, and found construction costs were 61.8% of a single-family home’s sale price and consisted of eight major segments: interior finishes (29.6%), framing (18%), exterior finishes (15%), major system rough-ins (13%), foundations (11.6%), final steps (6.8%), site work (5.6%) and other costs (0.5%).
- According to the survey, the average construction cost of a single-family home is $289,415, rising to $103 per square foot from $95 per sf in 2013. Builders reported cost increases for labor (3.3%), material (4.5%) and subcontractors (5%).
- Respondents also reported framing and truss material increases, up as much as 24%, and trouble finding framing crews. Excavation, foundation, concrete, retaining walls and backfill costs have risen, particularly in the cost of cement, ready-mix concrete, concrete brick and block, rising 13%-18%.
Dive Insight:
Although average prices of new, single-family homes have increased — reaching $468,318 in 2015 — builder profit was down .3% from 2013. According to the NAHB, the rise in home prices speaks more to rising costs rather than increased profit, and, since the housing recovery, builder overhead and general expenses have risen to more historically typical numbers.
The average size of the home in the 2015 construction cost survey was 2,802 square feet with a lot size of 20,129 square feet, approximately a half an acre, both metrics rising from 2013. The average sales price of $468,318 is the highest ever since the survey began and is up from $345,800 in 2014.
The NAHB sent 4,090 homebuilders the survey questions via email, asking respondents to provide information about the homes they built in 2015; however, they received only 33 usable responses, so the sample is not large enough for a geographic breakdown. According to the NAHB, all results are national averages and can vary from place to place.