Red tape adds a whopping $132K to the cost of a new home: expert

Permits, building codes, inspections, and regulations are tacking on huge costs to build new single-family homes, which are inevitably passed along to homebuyers.And the burden is only growing, according to the National Association of Home Builders.A new NAHB study found regulatory costs have jumped almost 40% in five years and now account for 26.4% of the average sales price of a home.Given a new home averaged $499,500 in January, it equals $131,734 in regulatory costs for the typical home.

That’s a burden for a nation already short millions of housing units and struggling with housing affordability, said NAHB Chairman Bill Owens.This study illustrates how excessive regulation is deepening the nation’s housing affordability crisis and making it harder for builders to deliver the affordable, attainable housing that our nation sorely needs,” Owens said.“Policymakers should remove unnecessary and costly regulations that are pricing buyers out of the market and slowing construction of new homes and apartments.” Those costs make it even harder to solve the housing shortage.

Already, it will take close to eight years to close the supply gap, according to a new report on the housing supply gap from the Realtor.com economic research team.NAHB studies regulations of different kinds—building codes, architectural designs, labor rules, fees, and studies.The kinds of costs to a home have changed over time.

Where the price of land rules fell from 2021 to 2026, for instance, construction rules increased by a higher percentage.NAHB’s data, which takes into account numbers from the U.S.Census Bureau, shows costs increasing steadily.

In 2011, they contributed $65,224 to the cost of a new home.By 2021, that rose to $93,870.Regulations create costs in different ways.

For instance, about 88% of developers told NAHB they must comply with extra design standards set by communities, above and beyond the set zoning code.Or they face requirements to leave a por...