New home regulatory costs up 40% in 5 years, study finds 

A new study shows there has been a significant increase in the regulatory costs associated with building a new home — particularly during the construction phase.

Research by the National Association of Home Builders (NAHB) found that the average regulatory costs for a new single-family home in 2026 total $131,734, up about 40% from 2021 when these costs equaled around $93,871. Regulatory costs totaled about $84,671 a decade ago.

Current regulatory costs represent 26.4% of the average new home sale price, which the NAHB estimated was $499,500 in January.

To get a measure of these financial impacts, the NAHB said it assessed the costs involved with developing a plot of land — including zoning approval and other compliance fees — and the fees incurred during home construction. The trade association did not factor in other government-related policies (like tariffs or immigration) that can impact the cost of building a home.

Big jump in construction fees: Over the past five years, a significant increase has occurred in the construction phase of the home building process, according to economist Eric Lynch, who authored the NAHB's study.

Much of that increase has been driven by higher building permit fees and building code changes, which now account for more than 45% of the total regulatory costs. The study itself did not delve into the causes of the increases or offer an opinion on which costs may be excessive.

"The underlying premise is that, in an environment where housing is regulated in a complex way by a variety of federal, state and local entities, it is useful to have a numerical estimate of how much regulation exists and its aggregate dollar value at present when contemplating new policies or revising existing ones," Lynch said in an email to Real Estate News.

High costs 'impeding' housing supply fix? Others in the industry, however, are drawing their own conclusions.

"Costly and inefficient regulatory policy is clearly impeding the ability of builders to increase the housing supply," NAHB Chief Economist Robert Dietz said in a news release addressing the association's latest builder sentiment survey, which found that builder confidence fell from May to June.

"Easing permitting bottlenecks, density limits and inefficient zoning rules would help reduce costs and support the housing growth the nation needs," Dietz added.

Bill Owens, chairman of the NAHB, said the study also "illustrates how excessive regulation is deepening the nation's housing affordability crisis and making it harder for builders to deliver the affordable, attainable housing that our nation sorely needs."

"Policymakers should remove unnecessary and costly regulations that are pricing buyers out of the market and slowing construction of new homes and apartments," Owens added.

Lawmakers moving toward action: The NAHB is among a wide cohort of industry advocates who have been pushing for federal lawmakers to pass the 21st Century ROAD to Housing Act, the latest version of which is expected to receive congressional approval soon. Parts of the bill are intended to make it easier to build manufactured homes and reduce construction-related regulations.

"This landmark legislation would expand housing opportunities for buyers and renters, strengthen homeownership, and help tackle the affordability challenges facing communities nationwide," Owens said in a June 16 statement. "It's time for Congress to move this historic housing package across the finish line."