It seems that every year purchasing a single-family home gets further out of reach. You've likely felt the pain. Below we'll dive into the make-up of these added costs, bringing clarity to the actual portions of an average single-family build that are driving costs sky-high.
Background
Thanks to NAHB's bi-annual cost breakdown, Fordje was able to pull this high-level data into real-world costs over the past 22 years, applying Consumer Price Index (CPI) inflation rates to previous years to compare build costs on an even playing field. The comprehensive view has been simplified into major "build categories" to show what portions of your build have been impacted over the years.
Cost Analysis & Impact
Over the past 22 years, adjusting for inflation, average single-family build costs across the US have increased from $255,699 to $429,071 - a 68% increase!
Inflation-adjusted build costs per category
| Category | 2002 | 2004 | 2007 | 2009 | 2011 | 2013 | 2015 | 2017 | 2019 | 2022 | 2024 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Building Permit Fees | $3,459 | $2,561 | $5,676 | $6,219 | $4,392 | $5,008 | $4,625 | $5,187 | $6,106 | $8,855 | $7,708 |
| Excavation, Foundation, Concrete | $18,359 | $31,690 | $23,371 | $23,241 | $24,026 | $31,720 | $44,705 | $32,953 | $42,383 | $46,382 | $44,534 |
| Roof Sheathing & Roofing | $9,313 | $11,524 | $16,026 | $18,003 | $10,592 | $13,690 | $15,030 | $10,984 | $16,163 | $18,131 | $23,124 |
| Electrical & Lighting | $10,909 | $13,765 | $16,359 | $15,712 | $14,467 | $17,363 | $20,811 | $16,781 | $20,832 | $30,359 | $32,973 |
| HVAC & Other Major Systems | $11,707 | $12,484 | $13,689 | $13,748 | $12,917 | $15,359 | $18,113 | $14,951 | $18,318 | $25,300 | $27,834 |
| Total | $255,699 | $323,626 | $325,186 | $322,426 | $255,504 | $333,227 | $385,385 | $305,728 | $359,537 | $420,816 | $429,071 |
To note, there are some categories that have seen massive percentage increases over this timeline. Categories like Electrical & Lighting and Roof Sheathing & Roofing have risen drastically, due to the increased cost of labor and lack of qualified individuals to perform these trades. HVAC increases can be attributed to the influx of new homes being built with heat pumps and traditional HVAC. The increased costs for Foundation and Concrete work is a product of the volatility seen in the ready-mix concrete market.
Top Inflation-adjusted cost increases from 2002 to 2024
| Category | 2002 to 2024 - CPI Adjusted Cost Increase |
|---|---|
| Electrical & Lighting | 302% |
| Roof Sheathing & Roofing | 248% |
| Excavation, Foundation, Concrete, Retaining Walls | 243% |
| HVAC & Other Major Systems | 238% |
| Building Permit Fees | 223% |
As we wrote in our previous article, the cost of Building Permit Fees has also made the list, and continues to outpace many build cost categories. This stems from to the increased complexity of building codes, subsequent re-submittals and additional administration needs to get Building Department approvals.
Key Takeaways
Build costs have continued to outpace inflation over the past two decades. Overall single-family home builds have increased by a CPI-adjusted 68%, equaling roughly 30% every ten years. However, as a builder or developer, there are things you can do to cushion the cost increase:
- Explore modular home options: Pre-wired and plumbed, drastically reduced build coordination, and low-cost engineering are a handful of the financial benefits of these emerging markets.
- Negotiate bulk discounts: 10-20% savings on material purchases and waste/scrap reduction directly impact the bottom line.
- Schedule off-peak builds: 5-10% contractor discounts and additional labor volume will offset costs for many of the impacted trades.
- Improve construction efficiency: Utilize software tools that streamline the build process, ensure accuracy, and decrease timelines/costs with the local Building Department.
Reach out to learn how Fordje can help you decrease those building permit fees through accurate permit data!
