Why Do Average Construction Costs of Homes Vary From State to State?


Quick Answer

Average construction costs of homes vary from state to state due to the cost of local home building contractors and subcontractors, the cost of local building permits, applicable taxes and fees and land development costs. The cost of land to build the house on also varies drastically across the country.

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Full Answer

According to the National Association of Home Builders, there are eight main stages of home construction each with their own associated costs. A 2013 study found that interior finishes account for the largest share of construction costs at 29.3 percent. Framing of the home accounts for 19.1 percent, exterior finishes account for 14.4 percent, and major system rough-ins account for 13.4 percent. The final four stages are foundations at 9.6 percent, site work at 6.8 percent, final steps (landscaping, clean up, and other finishing tasks) at 6.6 percent and other costs at 0.9 percent.

The costs of each of these steps can vary from state to state due to materials costs, labor costs, and taxes on goods and services. The 2013 study by the National Association of Home Builders found that the average home was built on 14,359 square feet of land, had 2,607 square feet of finished area and sold for $399,532.

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