Regulatory Costs Add a Whopping $93,870 to New Home Prices

Regulations imposed by all levels of government account for $93,870, or 23.8 percent of the current average sales price ($397,300) of a new single-family home, according to a new study by the National Association of Home Builders (NAHB).

Of the $93,870 figure, $41,330 is attributable to regulation during development, and $52,540 is due to regulation during construction.

“This study illustrates how overregulation is exacerbating the nation’s housing affordability crisis and that policymakers need to take bold steps to reduce or eliminate unnecessary regulations that will help builders increase the production of quality, affordable housing to meet growing market demand,” said NAHB Chairman Chuck Fowke, a custom home builder from Tampa, Fla.

Of note, the study on the cost of regulation does not take into effect how rising lumber and other material prices over the past 12 months have raised housing costs. NAHB completed another report last month which shows rising lumber prices that have soared more than 250 percent since April 2020 have added $35,872 to the price of a typical new home. This figure is on top of the $93,870 cost due solely to regulation.

While NAHB’s previous regulatory estimates in a 2016 study were fairly similar, the price of new homes increased substantially in the interim. When applying these percentages to Census data on new home prices, the data show an estimate that regulatory costs in an average home built for sale went from $84,671 to 93,879 — a 10.9 percent increase during the five-year span between NAHB’s 2016 and 2021 estimates.

View the full study on the cost of regulation and the analysis on rising lumber prices increasing home prices nearly $36,000.