Washington Report
Home Building Regulatory Cost Burdens Increased 40 Percent From 2021 To 2026
(Editor’s Note: as cited in this article in eyeonhousing.org, record increases of tariff rates on building materials, as well as other factors are significant impacts on the cost of home building now.)
The following re-printed from NAHB’s Eye On Housing.
A new National Association of Home Builders (NAHB) study (released this summer) shows that, on average, regulations imposed by government at all levels account for $131,734, or 26.4 percent, of the final price of a new single-family home built for sale. Of this amount, $46,795 is due to a higher price for the finished lot, attributable to regulations imposed during the lot’s development. The remaining $84,939 is the result of regulatory costs imposed on the builder during construction, after the builder purchases the finished lot.
The individual line items in the above figure range from under $2,000 per home for the pure cost of delay during the construction phase of the project, to more than $40,000 for changes in building codes over the past 10 years.
Results show that the cost of regulation climbed at its fastest rate between consecutive surveys. The current estimate of $131,734 is over 40 percent higher than the $93,871 figure from the 2021 study, and more than double the NAHB’s initial estimate of $65,224 back in 2011.
The estimate of $46,795 in regulatory costs incurred during lot development is based largely on the “Land Developer Survey on Regulatory Costs” conducted by NAHB in March of 2026. The $84,939 estimate of regulatory costs during the construction phase is based largely on questions in the March 2026 survey for the NAHB/Wells Fargo Housing Market Index (HMI). Data from the two surveys were combined with information on average construction times, interest rates, profit margins etc. to produce estimates of regulatory costs as a percentage—either of the price of a lot purchased by a builder, or of the builder’s narrowly defined cost of construction. The percentages were then converted to dollars using the January 2026 average new home price of $499,500 from the first release of the U.S. Census Bureau’s New Residential Sales report. For more information on the methodology, including both survey questionnaires and a complete documentation of all other information incorporated into the estimates, please consult the full study.
Regulatory costs are one of several factors, including record increases of tariff rates on building materials, ongoing skilled labor shortage, a dearth of available lots and tighter lending conditions, currently limiting the supply of housing—particularly housing for the entry-level market, where additional inventory is most needed.
