If you have ever wondered about the various components that go into the cost of new residential construction, the chart in this article from a survey of builders conducted by the NAHB will provide some clarity!
For any of us who have ever bought a house or even thought about buying a house we often wonder about the costs that go into making a house and why a home in New York seems to sell for so much more than a similar sized home in most other markets around the country.
Much of the difference will be dictated by the price of the land (location, location, location), a fact I can attest to living in a bedroom community about 35 miles outside of New York City. In this region it is not uncommon for a lot of buildable land to sell in the hundreds of thousands and sometimes even in the millions of dollars (i.e. McMansions).
For that reason the average selling price in this region will be much higher than the national average that’s provided in this chart of $399,532. Additionally, when you get into the higher end of the market many of the materials that a builder puts into a house will need to be high-end as well further inflating the ultimate selling price.
And due to the greater financial risk for the builder when taking on a project in the highest end of the market, they will likely be looking for a greater profit margin than the 9.3% national average that is listed in the chart from the survey.
For any potential buyer of new construction or even someone who is potentially looking to buy a resale, learning what goes into the building of a house is extremely valuable information!