What Buyers Expect to Pay vs. Actual Home Prices

If you're in the market for a new home, you may wonder about the factors contributing to the home's total cost. The National Association of Home Builders (NAHB) recently published a Cost of Construction Survey, which details the various costs of building a typical new single-family home. Many of the results show that the percentage contribution of each component has remained relatively consistent in recent years. According to the 2024 survey of home builders, the biggest single component of a new home’s total sales price is construction costs, which accounts for around 64.4%. For example, the sales price of a $665,298 house would likely factor in construction costs of approximately $428,215, or 64.4%. Survey respondents broke down construction costs into eight major construction stages: • Interior finishes (e.g., cabinets, drywall, flooring): 24.1% • Major system rough-ins (e.g. electrical, HVAC, plumbing): 19.2% • Framing: 16.6% • Exterior finishes (e.g., roofing, windows): 13.4% • Foundations: 10.5% • Site work (e.g., architecture, building/permit/impact fees): 7.6% • Final steps (e.g., driveway, landscaping): 6.5% • Other costs: 2.1% The share of construction costs to the total price of a new home is the highest since NAHB first produced the survey in 1998. Some of the factors that contribute to the construction costs are the ongoing skilled labor shortages and building material price increases.  The average single-family home size in the 2024 survey was 2,647 sq. ft. of finished floor space, an increase of 86 sq. ft. from 2022. From 2015 to 2022, the average square footage of a home trended downward. Constructing homes with smaller square footage in recent years is a response by builders to meet the current housing affordability challenges buyers face. Though building practices and the cost of labor, land and materials can vary widely across the country, these national averages provide an overall snapshot for the building industry. To learn more about the home building process in Columbia, MO contact info@columbiahba.com or visit columbiahba.com

If 2025 is the year you have decided to purchase a new home, whether as a first-time buyer or a seasoned home owner, the best time to start preparing is now. Following these five simple strategies will help place you in an ideal position to find a home that is a good fit for you and your family. Take a Closer Look at Your Credit Score. The first step toward purchasing a new home is to examine your finances closely. Start by making sure you know your credit score. Your credit score will help determine the interest rate and associated costs you pay on a mortgage loan. In general, the higher your credit score, the lower the interest rate you will qualify for. Examine Your Finances. Before you search for a home, you must know how much house you can afford. Experts recommend talking to a qualified lender to help you determine your price range. As the buyer, you are the best judge of what you can realistically afford, so you should not set your home buying budget based on your maximum loan approval amount. Plan for a Down Payment and Associated Costs. Once you figure out how much you’re willing to spend, you need to set a down payment goal. The longstanding myth is that you must put down 20 percent to purchase a home. You can move forward with a home purchase with a much lower down payment. Two factors that primarily impact your down payment amount are the home’s price and the type of home loan you secure. In addition to your down payment, you must budget for loan fees and closing costs. Evaluate Your Needs. Put pen to paper, outline what you need and want in a new home and create a “must have” list. Start by thinking about why you’re ready to purchase a new home. Maybe you need a bigger space or want to move to a school district that fits your family’s needs. Creating a list of what you need in your new home will save you time when you are ready to start looking. Your next home may not meet every item on your priority list, so you must decide what factors you can compromise on and how you can stay within your budget. Sell Your Current Home. If buying your home this year is contingent upon selling your home, you should be prepared if the timing doesn’t align perfectly. Another consideration is to ensure you have sufficient funds on hand if you cannot have concurrent home closings. A real estate agent can help you navigate the transitions. A buyer or seller market makes a difference in timing the transaction, and a real estate agent and HBA of Columbia can shed light on local market factors. Contact Jami Clevenger (jami.clevenger@columbiahba.com) to learn about homeownership opportunities in the Columbia, MO area.