Tarriffs notwithstanding, the cost of a new home has been driven primarly by the cost of the labor it takes to build it. This will come as no surprise to home builders. But this take from Curbed is illuminating:
A new analysis of the housing market has found that substantial differences in the price of labor have become the primary reason for stratifying construction costs across the country.
Construction costs have jumped 23.6 percent since 2004, according to “What’s Up With Construction Costs?” a new report by BuildZoom economist Issi Romem. The housing cost spike that started in the mid-2000s at the tail end of the pre-Recession building boom was initially caused by increases in material costs; the continued rise is now mostly a factor of rising labor costs.
BuildZoomRomem notes that the key drivers of construction costs are still “lots and local regulations,” the combination of high land prices and restrictive land-use policy. But in especially expensive metros, labor costs have also vastly accelerated the cost of construction.