NAHB recently published the latest construction cost survey. This survey data shows that while the average price of a single family home has dropped over the last two years, the share of that price which goes to construction cost and finished lot cost has not changed significantly.
The average price of a new single-family home in NAHB’s 2011 survey was $310,619, down from $377,624 in 2009. In 2011, the cost of construction accounted for nearly 60% of the final sales price of an average home , while the cost of the finished lot accounted for 22%. This was similar to results from our last survey in 2009. Please keep in mind that the average price of a new single-family home is a national number and varies significantly by region.
Although the share of the price going towards the cost of construction has remained stable over the last two years, the actual cost of constructing a new single-family home in 2011 is significantly less than in 2009. The average construction cost of homes in the new survey is $184,125, while the 2009 cost was $221,511. This is likely a result of the smaller square footage of homes built in 2011. The average finished area of a single-family home declined from 2,716 square feet in 2009 to 2,311 square feet in 2011. When we divide the average cost by the average square footage, we see that the cost per square foot of constructing a home among surveyed NAHB members has remained around $80/sq ft for both 2009 and 2011.
In addition to declines in the size of a home, profit accounted for an all-time low of just 6.8% of the final sales price in 2011. This is down from 8.9% in 2009.
We also asked survey participants to further breakdown the cost of constructing a new single-family home. As usual, framing and trusses accounted for the largest share of construction cost in 2011 homes (13.5%). This was followed by excavation, foundation and backfill (9.3%), plumbing (6.0%) and cabinets and countertops (5.6%). HVAC, siding, tiles and carpet, electrical wiring, and drywall each accounted for between 4% and 5% of total construction costs. Below is a table detailing the single-family price and cost breakdown.