A new National Association of Home Builders study shows that, on average, regulations imposed by government at all levels account for 24.3 percent of the final price of a new single-family home built for sale. Three-fifths of this—14.6 percent of the final house price—is due to a higher price for a finished lot resulting from regulations imposed during the lot’s development. The other two-fifths—9.7 percent of the house price—is the result of costs incurred by the builder after purchasing the finished lot.
The above estimates are based largely on questions included in the survey for the March 2016 National Association of Home Builders’/Wells Fargo Housing Market Index, combined with long-run assumptions about average construction times, interest rates, profit margins, etc. The survey questionnaire and an appendix describing each additional assumption and the data on which it’s based can be found in the full study. The full study also contains substantial additional detail on the different types of regulatory costs and where and how they impact the development-construction process.