Top Posts of 2020: Cost of Constructing a Home in 2019

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With the end of 2020 approaching and a vaccine now being deployed, NAHB’s Eye on Housing is reviewing the posts that attracted the most readers over the past, dramatic year — a year that saw housing emerge as a bright spot for an economy under stress.

In February, the NAHB Economics team examined costs required to build a single-family home in 2019. Those costs likely rose in 2020, with additional gains expected in 2021 due to rising input costs.

 

NAHB recently published its latest Cost of Construction Survey. Results show that 61.1% of the average home sale 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. The average builder profit margin stood at 9.1% in 2019, compared to 10.7% in 2017 and 9.0% in 2015.

At 4.9% in 2019, overhead and general expenses were essentially the same as in 2017 (5.1%). The remainder of the average home sale price consisted of sales commission (3.7%), financing costs (1.7%), and marketing costs (1.0%). These percentages are also similar to their 2017 breakdowns.

Survey respondents broke down construction costs into 8 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%).

See Table 1 below for more details.

Please click here to be directed to the full article (which includes historical results back to 1998).



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