More than 60% of a Home's Sales Price Goes to Construction Costs

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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%. NAHB economist Carmel Ford provides more analysis in this Eye on Housing blog post and the infographic below includes more details on the construction cost breakdown.

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