Top 8 Building Costs That Bump Up Home Prices

March 3, 2020
putting up a frame
By ungvar

Warning: These figures may bring back stressful memories. NAHB surveyed builders to find out which construction costs, which make up an impressive 61.1 percent of the average home's sales price, have them running their credit cards the most. The survey found that construction costs are up from 2019, and that interior finishes top the bill, followed by framing, major system rough-ins, and exterior finishes. See how your costs compare to the averages across the nation. 

NAHB’s latest Cost of Construction Survey reveals that 61.1% of the average home sales price consisted of construction costs in 2019, up from 55.6% in 2017 but similar to the 2013 and 2015 breakdowns of 61.7% and 61.8%, respectively.

The finished lot cost was the second largest cost at 18.5% of the sales price, down from 21.5% in 2017.

Survey respondents broke down construction costs into eight major construction stages. Interior finishes, at 25.4%, accounted for the largest share of construction costs, followed by framing (17.4­­%), major system rough-ins (14.7%), exterior finishes (14.1%), foundations (11.8%), final steps (6.8%), site work (6.2%), and other costs (3.8%).

These total construction costs accounted for $296,652 of the average home sales price of $485,128. It should be noted that these survey results are national averages, and the survey sample is not large enough for a geographical breakdown.

However, the construction cost percentages in the survey serve as a useful yardstick as these component shares are relatively comparable for other average home prices. For example, the sales price of a $300,000 home would likely factor in construction costs of around $180,000, or 60%.

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