Understanding Home Construction Costs – Key Insights for Home Buyers and Realtors

As your trusted mortgage guy, I want to share some valuable insights from a recent study that sheds light on the costs associated with constructing a home. According to a survey by the National Association of Home Builders (NAHB), the average sales price of single-family homes in 2022 was $644,750 and includes costs for construction, the finished lot, financing, overhead and general expenses, marketing, sales commission, and profit.

Total construction costs for the “average” single-family home included in the survey were $392,241. Thinking about building a home? The pie chart below breaks out those costs for the “average” home.

Rising Construction Costs and Their Impact

The study reveals that the average cost to construct a single-family home has seen a significant increase. Understanding these costs is essential because they directly affect the home buying process. The breakdown includes expenses like building materials, labor, and the cost of acquiring lots, which have all seen upward trends.

Why This Matters for Home Buyers

For future and current homebuyers, this information is vital. Knowing the breakdown of construction costs can help you budget more effectively and set realistic expectations when considering building a home. It's also crucial for understanding the market dynamics that influence the price of new homes, which can differ significantly from existing homes.

Implications for Realtors

Realtors play a crucial role in guiding their clients through the financial aspects of buying a home. With the cost of construction on the rise, realtors need to be well-informed to advise their clients accurately. This knowledge ensures that you can provide your clients with up-to-date information, helping them make informed decisions whether they're buying or building.

Our Commitment

We're committed to providing you with the most current and relevant mortgage insights. Whether you are a first-time home buyer, looking to build, or a realtor seeking to best serve your clients, we are here to help. Remember, we specialize in closing loans efficiently – in as little as 18 business days – and we keep you updated every step of the way.

Thank you for trusting us with your mortgage needs. If you have any questions about how construction costs might affect your home buying plans or need assistance with your mortgage options, don't hesitate to reach out. Let's build your future together, with confidence and clarity.