The National Association of Home Builders (NAHB) has released its latest Cost of Construction Survey, which sheds light on the breakdown of costs for an average home sale in 2022. The survey found that construction costs accounted for 60.8% of the total sale price, which has remained steady since 2019. This is only the fourth time since the survey began in 1998 that construction costs have represented more than 60% of the total price of a home. The previous high points were in 2013 and 2015.
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The survey also revealed that finished lot costs were the second-largest expense, accounting for 17.8% of the sale price. This figure is down from 18.5% in 2019. Overhead and general expenditures comprised 5.1% of the sale price, a marginal increase from 4.9% in 2019. Sales commission (3.6%), financing costs (1.9%), and marketing costs (0.7%) made up the remaining portion of the sale price.
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The construction costs were broken down into eight stages, with interior finishes accounting for the largest share at 24.0%. Framing came in at a close second, making up 20.5% of the total cost, while major system rough-ins accounted for 17.9%. Exterior finishes represented 11.8% of the price, while foundations and site work came in at 11.0% and 7.4%, respectively. The final steps and other costs were 5.9% and 1.5%, respectively.
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It is worth noting that these figures are national averages and that the sample size was insufficient to provide a geographical breakdown. Nonetheless, the percentages help provide a benchmark for the construction costs of other homes at various price points. For instance, a $450,000 home would likely have construction costs of around $270,000, or 60% of the sale price.
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Overall, the survey suggests that construction costs remain a significant factor in the total sale price of a home. While there have been fluctuations, construction costs have remained relatively stable since 2019. However, with finished lot costs and overhead expenses also factoring into the sale price, it is clear that building a home involves a complex web of costs that must be managed carefully.

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