NAHB: Over half of home’s sales price goes to construction costs

The National Association of Home Builders’ (NAHB) latest Cost of Construction Survey revealed 60.8% of the average home sales price consisted of construction costs in 2022, similar to the 61.1% breakdown posted in 2019. 

Since the inception of this series in 1998, this is the fourth time construction costs represent over 60% of the total price of the home. It was 61.7% in 2013 and 61.8% in 2015.

The finished lot cost was the second largest cost at 17.8% of the sales price, down from 18.5% in 2019.

At 5.1% in 2022, overhead and general expenses were also essentially unchanged when compared to 2019’s 4.9%. The remainder of the average home sale price consisted of sales commissions at 3.6%, financing costs at 1.9%, and marketing costs at 0.7%. These percentages are also similar to the 2019 breakdowns. 

These survey results are national averages, and the survey sample is not large enough for a geographical breakdown. Survey respondents broke down construction costs into eight major construction stages.

  • Interior finishes accounted for 24.0%
  • Framing accounted for 20.5% 
  • Major system rough-ins accounted for 17.9%
  • Exterior finishes accounted for 11.8% 
  • Foundations accounted for 11.0%
  • Site work accounted for 7.4% 
  • Final steps accounted for 5.9%
  • All other costs accounted for 1.5%

The total construction costs accounted for $392,241 of the average home sales price of $644,750. 

The construction cost percentages in the survey, however, serve as a useful yardstick as these component shares are relatively comparable for other average home prices. For example, the sales price of a $450,000 home would likely factor in construction costs of around $270,000, or 60%.

National Association of Home Builders economist Eric Lynch provides more analysis in an Eye on Housing blog post.

NAHB report: Builder confidence declined every month in 2022