Median square foot prices for new single-family detached (SFD) homes started in 2024 grew modestly, according to NAHB’s analysis of the latest Survey of Construction (SOC) data. For custom, or contractor-built, homes, the median price was $166 per square foot of floor space1, up slightly from $162 in 2023. For spec starts, after excluding record-high improved lot values, the median was $153 per square foot of floor area, inching up from $150 a year earlier. There is still notable regional variation in square footage prices. In New England, after excluding lot values, half of the spec homes started in 2024 had prices exceeding $282 per square foot. In the East South Central division, the median was $133, representing the most affordable prices per square foot.
Contract prices of custom homes do not include the value of an improved lot, as these homes are built on the owner’s land (with either the owner or a contractor acting as a general contractor). Consequently, contract prices are typically reported as lower than the sale prices of spec homes. To make the comparison more meaningful, the cost of lot development is excluded from sale prices in this analysis.
The recent modest square foot price changes marked a sharp decline from the double-digit price hikes that characterized home building in the post-pandemic environment. As recently as 2022, increases in square foot prices of new SFD homes were approaching 20%, more than doubling the historically high U.S. inflation rate of 8%. The deceleration for median square foot prices reflects slower growth in building material prices and home building wages in 2024. The shifts towards cost-effective methods, such as building homes on slabs rather than with full or partial basements, also contributed to moderating the increases in square foot prices.
In the for-sale market, the New England division registered the highest and fastest-rising median square foot prices. Half of the new for-sale SFD homes started here in 2024 were sold at prices exceeding $282 per square foot of floor area, paid on top of some of the most expensive lot values in the nation. The Pacific division came in second, with median prices of $223 per square foot.
The most economical SFD spec homes were started in the South region, where the median sales price per square foot was below the national median of $153. The East South Central division is home to the least expensive for-sale homes. Half of all for-sale SFD homes started in the division in 2024 registered a square foot price of $140 or lower, paid on top of the most economical lot values in the country. The other two divisions in the South— South Central and South Atlantic—registered median prices of $144 and $147 per square foot, ranking them the second- and third-lowest medians in the nation.
Because square foot prices in this analysis exclude the cost of developed lots, highly variable land values cannot account for regional differences in square footage prices. However, overly restrictive zoning, stricter building codes, and higher regulatory costs undoubtedly lead to higher per-square-foot prices. Regional differences in home types, common features, and construction materials also contribute to price variations. In the South, for example, lower square foot prices partially reflect a less frequent regional occurrence of costly new home features like basements.
This article provided by the National Association of Homebuilders.
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