The cost of everything that goes into building a new home
Bank of America breaks down what it takes to put the walls up.
For most American households, the home is the most important asset on their balance sheet.
By mid-2022, changing preferences for housing demand brought about by the pandemic, coupled with millennials moving into their prime home-buying years, pushed the number of single-family homes under construction above 800,000 for the first time since 2006.
A fantastic infographic in a report out today from Bank of America analysts covering homebuilding and building products companies across North America, Europe, and Australia, breaks down what goes into building one, who provides it, and how much each component tends to cost:
“We estimate the bill of materials to build a house has increased at a 3.8% compound annual growth rate (CAGR) from $23,073 in 1982, consistently outpacing overall inflation over the last 40+ years,” they write. “Outside of materials, raw land as well as development and entitlement costs for lots are rising at a faster pace than direct building costs. The construction labor market remains tight.”
That’s bad news for American homeowners, who already need an annual income of $100,000 to afford a median-priced home in nearly half of all metro areas.
