Cost to build new homes increased dramatically over the last decade
February 5, 2024
OLYMPIA…The cost to build new homes in Washington increased dramatically over the last decade, according to a new report by the Building Industry Association of Washington.
All phases of construction in residential homebuilding have seen increases, ranging from 16% to 107%.
“As the cost of housing makes headlines every day, it’s important for policymakers to understand what’s behind those costs,” said BIAW Policy and Research Manager Andrea Smith. “Building materials, labor costs and regulatory requirements all come together to increase the bottom-line cost to build. Those higher costs drive thousands of families out of the single-family-housing market. They also increase costs to build apartments and other government-subsidized housing.”
Sitework: Biggest jump in cost to build
Sitework saw the most substantial increase of 107%. The report predominantly attributes this rapid increase to the shortage of skilled labor. Sitework prepares the construction site for building. It’s everything from clearing and grading the site to foundation work, all requiring skilled professionals to do the work.
Cost to build exterior walls jumps 80%
Costs for building exterior walls reached an 80% increase. BIAW asserts the new minimum envelope requirements in Washington’s new energy code drive this increase. These minimum requirements require more expensive and extensive windows and insulation.
Framing and major system rough-ins on the rise as well
While it’s typical to refer to plumbing, mechanical, and electrical as major system rough-ins, this report opted to break these phases out for educational purposes.
Following closely, framing saw a 66% increase while electrical costs surged 65%, both influenced by the labor shortage as well as new electrical code requirements.
Plumbing costs also increased by 56%. It does not appear material costs increased so BIAW attributes this increase to the shortage of skilled workers.
The mechanical segment of the industry exhibited cost increases of 45%. This segment of the industry also experienced modest gains in labor costs. However, the added costs associated with heat pump systems drive this cost as well, despite being heavily incentivized in the energy code.
Recommendations to slow the rising costs of homebuilding
This legislative session, BIAW supported two bills that would help build the future workforce needed to address the skilled trades shortage.
Builders testified about the importance of easing barriers to apprenticeships in residential construction trades. HB 2087 failed to pass out of the House Labor and Workplace Standards Committee.
BIAW also supported reforms to the Washington State Energy Code, recommending the state adopt the model International Code Council Energy Code, moving away from a completely custom building code. If the State Building Code adopted the ICC’s model energy code, builders could more easily access tax credits under the Inflation Reduction Act. This would make things easier and less expensive for home builders and buyers alike.
Finally, the association recommends funding a Small Business Outreach Grant through the Department of Labor and Industries to conduct outreach activities to help employers learn about cost-saving, safety incentive, retro programs like ROII. These programs help reduce worker fatalities and injuries and lower workers compensation premiums paid by workers and their employers.
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The Building Industry Association of Washington is the voice of the housing industry. The state’s largest trade association with nearly 8,000 member companies, BIAW promotes and protects the vitality of the building industry so more Washington families can enjoy the American Dream of owning a home. Learn more at: www.biaw.com