flexiblefullpage - default
Currently Reading

Regulatory Costs Increased 44% in 10 Years

Advertisement
billboard - default
Economics

Regulatory Costs Increased 44% in 10 Years


June 1, 2021
New house exterior
Photo: AnnMarie | stock.adobe.com

Regulation costs are 11% higher today than five years ago, accounting for $93,870 of the final price of a new single-family home on average, according to the National Association of Home Builders. Regulatory costs accounted for an average of $84,671 of a new home's price in 2016, but those costs have increased 44% from 2011 when they averaged around $65,224. Breaking down the 2021 costs, $41,330 are due to a higher price for a finished lot and $52,540 result from regulatory costs imposed on the builder during construction after purchasing the lot. NAHB says regulatory costs are one of the biggest factors limiting housing construction.

The estimate of $41,330 in regulatory costs incurred during development is based largely on the “Land Developer Survey on Regulatory Costs” conducted by NAHB in March of 2021.  The $52,540 estimate of regulatory costs during the construction phase is based largely on questions in the March 2021 survey for the NAHB/Wells Fargo Housing Market Index (HMI).  Data from the two surveys were combined with information on average construction times, interest rates, profit margins etc. to produce estimates of regulatory costs as a percentage—either of the price of a lot purchased by a builder, or of the builder’s narrowly defined cost of construction.  The percentages were then converted to dollars using the February 2021 average new home price of $394,300 from the Census Bureau’s New Residential Sales report.  For more information on the methodology, including both survey questionnaires and a complete documentation of all other information incorporated into the estimates, please consult the full study.

Regulatory costs are one of several factors, including record increases in lumber prices, and widespread shortages of materials and labor, currently limiting the supply of housing—particularly housing for the entry-level market, where additional inventory is badly needed.

Read More
 

Related Stories

Market Data + Trends

20-Year High Mortgage Rates Won’t Crash the Housing Market—Here’s Why

Elevated borrowing costs are sidelining a growing share of prospective buyers, but today's market players are better protected than they were during the Great Recession over a decade ago

New-Home Sales

Consumer Confidence Reaches 5-Month High Despite Recession Fears

America's big spenders sprang back into action in September, but when it came to home purchases, consumers weren't quite so confident

Sales + Marketing

Lessons Learned From Previous Housing Market Disruptions

For home builders navigating today's housing marketplace, hope is not a strategy, wishing is not an action plan, and success is not an accident

Advertisement
boombox1 -
Advertisement
native1 - default
halfpage2 -

More in Category




Advertisement
native2 - default
Advertisement
halfpage1 -

Create an account

By creating an account, you agree to Pro Builder's terms of service and privacy policy.


Daily Feed Newsletter

Get Pro Builder in your inbox

Each day, Pro Builder's editors assemble the latest breaking industry news, hottest trends, and most relevant research, delivered to your inbox.

Save the stories you care about

Lorem ipsum dolor sit amet lorem ipsum dolor sit amet lorem ipsum dolor sit amet.

The bookmark icon allows you to save any story to your account to read it later
Tap it once to save, and tap it again to unsave

It looks like you’re using an ad-blocker!

Pro Builder is an advertisting supported site and we noticed you have ad-blocking enabled in your browser. There are two ways you can keep reading:

Disable your ad-blocker
Disable now
Subscribe to Pro Builder
Subscribe
Already a member? Sign in
Become a Member

Subscribe to Pro Builder for unlimited access

Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.