Single Family Construction Costs for 2013 Survey Results

[Giovanni Isaksen]

The NAHB's Eye on Housing has a new post on the Cost of Constructing a Single-family Home in 2013. In the post is a table of cost items that go into building and selling a new home based on the survey sent to their builder members (see chart below). The first thing you see is that builders don't make very much for all their hard work but the chart has a number of very useful items for any investor in the single family sector.

First is that both the 'soft' costs of sales and the 'hard' construction costs are broken out by % so they are easily compared to houses of different sizes and price ranges. How do they compare percentage wise with your rehab costs and results?

The second is that there are a lot of soft costs that should be tracked, even if you are performing the function yourself for 'free': Financing cost, marketing, sales, overhead and of course profit. If you'd like to someday be the owner of your company instead of chief cook and bottle washer, eventually you will have to hire someone to perform these functions so the sooner you track them as cost items the better.

The third is that the NAHB's eight divisions of construction cost breakdown are very useful because they follow the general order a house is built in and make it easy for field, office and supervisory personnel to code expenses properly. If you are in the single family construction or rehab biz you know what a pain it can be to get your people to code expenses properly so that as the owner you can tell where you're making money and where you're not (ask me how I know about this).

There are a couple other columns that would be helpful to have on the chart: the numbers broken out by square foot and the soft costs as a percent of the hard costs. The soft cost % of hard costs would help figure out what the markup for the hard cost line items should be. I'm an apartment guy and not in the single family biz but you could copy the figures to a spreadsheet and add those two columns very quickly. You could easily set it up so that when the square foot size of the house was entered it would display the costs for each line item.

Think how useful that would be if the chart had your costs built in instead of just national averages!

See the complete NAHB post here: http://bit.ly/1dJBxWT

Happy 2014 everyone and good hunting-