Builders Hampered by Soaring Regulatory Costs

The average cost to comply with regulations for new-home construction has climbed nearly 30 percent in just five years, according to the National Association of Home Builders. These costs include everything from new construction codes and storm-water discharge permits to local impact fees. The jump in regulatory costs has grown at about the same rate as the average price for a new home.

“It really makes it hard to satisfy the lower end of the market, which is a lot of first-time buyers,” Paul Emrath, the NAHB’s vice president for survey and housing policy research, told The Wall Street Journal.

Also, local infrastructure impact fees have risen by 45 percent, on average, since 2005 in 37 major home-building markets nationwide, according to a separate study by Zelman & Associates, a housing research firm.

Source: “Home Builders Say They Are Squeezed by Rising Compliance Costs,” The Wall Street Journal (May 7, 2016)