What a difference a decade makes. In 2005, the average cost of a new home (in the U.S.) was $297,00 and that measured approximately 2400 square feet, according to the U.S Census Bureau.
Figures recently released by the National Association of Home Builders ( NAHB) show that the trend is growing bigger. The average single-family home built in the U.S. in 2016 will be built on about a half-acre lot, totals about 2800 square feet of finished space and will sell for an average cost of $468,318.
What factors have led to this dramatic increase in cost? First, homes are about 400 square feet larger. Also according to a list compiled by International Contractors Inc., during the years 2002 through 2008, home construction costs rose approximately %5 per year. High oil prices during those years influenced manufacturing and transportation costs, leading to higher and higher home construction costs. When the recession and housing bubble hit in earnest, builders were forced to reduce costs, and did so.
As a result, construction costs dropped to $80 per square foot in 2011. But with new home buyers demanding more room, and more amenities, home prices and construction costs are now again creeping higher that they were just a few years ago.
A housing contractor currently in business will incur average construction costs for a single-family home today of around $289,415, which is $103 per square foot to complete, up from around $80 per square foot in 2011. According to the U.S. Census figures, construction costs were at their highest, $95 per square foot in 2013.
The biggest expense for general contractors when constructing a new home are the actual construction costs- including labor and materials at almost 62%. The improved lot size accounts for about 20% pf the cost, with builder profits averaging nine percent. Overhead and miscellaneous expenses round out the total, with addition of about two percent for financing, commission and marketing costs.
Of the total costs, framing and trusses are one of the biggest expenses, at around $17 per square foot today or 18% of the construction budget. Among other major stages of construction, interior finishes account for about 30 percent of a home’s cost, exterior finishes accounting for about 15 percent, major system rough-ins around 13 percent and foundations around 12 percent. Site work, final steps and other costs account for balance. Builders have reported steadily increasing lumber costs for the past four years. They note they are experiencing higher costs for cement, ready-mix concrete, and brick and block as well.
As the unemployment rate does down and wages rise, many builders are reporting that labor costs are increasing around 3 to 4 percent per year. Some builders experiencing difficulty finding carpenters and excavation crews as well.