The National Association of Home Builder’s most recent survey shows that home building is the most expensive it has been since 1998.
Home sizes are up, although lot sizes are down. The average size of the home in the 2013 construction cost survey was 2,607 square feet, which is up about 300 square feet from the average size of the homes reported in 2011.
Lot sizes are down. The average lot size in the 2013 construction cost survey was 14,359 square feet which is almost 1/3 of an acre. The average lot size has declined from about half an acre (21,780 square feet) in both 2009 and 2011. The Census Bureau’s reports that new residential construction shows that the average lot size for new homes sold peaked at 18,433 square feet in 2008, and hit a two decade long low of 14,359 square feet in 2013 in the NAHB survey.
The average costs of finished lots are up. Lot costs averaged $3.5 per square foot and $3.3 per square foot in 2009 and 2011, respectively. According to the recent survey, the average cost was $5.2 per square foot in 2013.
According to the NAHB survey, the average construction cost of a single-family home in the 2013 was $246,453. That is up from the 2011 average construction cost of $184,125 and is the highest it has been since 1998. Cost per square foot was relatively stable in 2009 and 2011 at about $81 per square foot. In 2013, it jumped up to $95 per square foot.
Builders reported significant increases in material costs, particularly lumber, as well as some increases in labor costs.
Increasing home prices make it less likely that new construction will put downward price pressure on existing home sales.