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New-Home Construction Costs Explained

New home under construction

When you purchase a newly built home, what are you actually paying for? Construction costs account for 61.8 percent of the total price, according to a survey conducted this summer by the National Association of Home Builders.

The average new home, built on a half-acre of land with 2,802 square feet of finished space, sold for $468,318, the NAHB said in its latest Cost of Construction Survey. Of that amount, $289,415 went for construction costs, including material and labor.

The second-largest expense was for the finished lot — $85,139, or 18.2 percent — followed by the builder’s profit $42,292, or 9 percent. The remaining 11 percent of the cost went for overhead and general expenses, sales commissions, financing, and marketing.

Construction costs were further broken down into eight categories:

  • Interior finishes: 29.6 percent.
  • Framing: 18 percent.
  • Exterior finishes: 15 percent.
  • Major systems rough-ins: 13.1 percent.
  • Foundations: 11.6 percent.
  • Final steps: 6.8 percent.
  • Site work: 5.6 percent.
  • Other costs: 0.5 percent.

Among the expenses for interior finishes were $16,056 (5.5 percent) for cabinets and countertops; $13,367 (4.6 percent) for flooring; $12,409 (4.3 percent) for interior trims, doors, and mirrors; $11,744 (4.1 percent) for drywall; and $2,760 (1 percent) for a fireplace.

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(Image: Flickr/Great Valley Center)