Government Regulation Driving Up the Cost of New Home Construction

A new study conducted by the National Association of Home Builders (NAHB) concludes that the average cost for home builders to comply with local, state, and federal regulation has risen by nearly 30%, increasing from $65,224 in 2011 to $84,671 this past March.

These regulatory costs include everything from impact fees, utility hookups, storm water regulations, and building permits to labor regulations from OSHA and the Davis-Bacon Act.

The study also found that an average of 24.3% of a home’s final selling price is the result of government regulation. The rising cost of regulations is one of the main reasons why new home construction has slowed, contributing to the lack of housing supply and rising home prices in recent years.

To read the full length NAHB study click here.

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