Cost of Constructing New Homes in Washington State in 2024

Executive Summary

‍

Since our original publication of the Cost of Constructing Homes in Washington in 2023, we’ve received multiple requests to update it based on the most current data available. In working with our members, we verified that the percentages for cost allocations offered by the National Association of Home Builders (NAHB) were realistic for our state. We are also pleased to include additional data on the price of raw land and the cost of building townhomes.

‍

Key Findings

• Single-family detached construction costs, on average, are $309 per square foot. There is some variation between the counties, likely from local market factors.  

• Townhome construction, on average, costs $404 per square foot. Please view the Results Section for an explanation of why this is higher than the cost of building single-family homes.  

• The raw land cost is $286,996 per lot for the counties reflected in this study: Kitsap, King, Pierce, Snohomish, and Thurston.  

‍

Methodology

‍

To conduct this study, we began with the most recent update to the NAHB's “Construction Cost Survey.” Since their survey contains national averages, we then surveyed a handful of members to ensure the percentages were geographically sound. Each category listed includes all the costs paid by a builder that goes into the listed item; such costs include those paid directly by the general contractor, the cost of hiring subcontractors, and the cost of materials.  

This report only examined the costs associated with the typical single-family home built in 2024. After examining the data and performing an outlier analysis, usable responses were recorded in the table, which can be found in the Results Section of this report. As previously stated, we also included the cost of building townhomes and the raw cost of land purchases.  

‍

Limitations

‍

The information published throughout this report is for illustrative purposes only. The percentages listed are based on an industry-wide survey conducted by NAHB and then verified to ensure accuracy with local market conditions. This report is not designed to capture representative characteristics of the average home built in 2024, nor is it to be used to compare costs year over year. The Census Bureau’s Survey of Construction is a better option for comparing specific costs over time as it contains more data points and is updated annually.  

‍

Although this report can provide a broad view of construction costs for the average new single-family home and townhome project, it is not a perfect tool for estimating costs for a particular-sized home in a particular location within the state. For more specific cost estimation for any given geographic area, subscription services such as RSMeans can provide more accurate insights than those captured in this report.  

‍

Results

‍

In 2024, Washington's new single-family homes sold for a median price of $690,701, which translated to $309 per square foot. The average size for this product was 2,505 square feet, and it sat on a 6,211-square-foot parcel of land.  

‍

Townhomes saw a median sales price of $592,195 and achieved an average cost-to-build of $404 per square foot. The caveat here is that typically, these structures are attached, and therefore, the square footage cost isn’t dependent on the square footage of the single housing unit but the entire structure. What looks like a higher cost to build is much lower than a detached single-family housing unit because more units are constructed in a single structure. The land cost is also spread over more than one unit, which translates to lower home sales prices for buyers.  

‍

Because of the outliers in lot size, we’ve included a median size of 3,007 square feet rather than an average. This is not a perfect illustration of lot sizing for townhomes because the average square footage of each new townhome built in 2024 was 1,568 square feet. That wouldn't make logical sense if the townhome structure were just two units. For this reason, we do not suggest drawing any inferences from this figure until we can pull more data from other counties in future reports.  

‍

‍

To acquire raw land, the median cost is $286,996 per lot. As the table shows below, the land cost varies widely between the location, the number of lots included in the purchase, and the land cost. As previously mentioned, this is likely due to local market pressures. For example, in Pierce County, a 12-lot purchase was completed for $712,000 compared to the 14-lots purchased for $2.4 million in Kitsap County. Lastly, Thurston County is not included in the table, as it had no recorded multi-lot sales for 2024.  

‍

‍

Lastly, we provided a sales price breakdown modeled after the NAHB report table. As we can see, the highest cost driver of the final sales price is involved in constructing the unit. The finished lot cost is the second highest, likely due to the improvements needed to place a unit on said parcel of land. It’s important to note here that the finished lot cost in the table below is not inclusive of land acquisition cost. This is primarily because there are indeterminate costs in developing raw land to ensure it’s ready for a residence to be built; this includes site-specific items such as water line service installation, grading, stormwater management systems, and more. For obvious reasons, these are hard to quantify in any statistically significant way, as variables from site to site vary widely.  

‍

‍

The last table shows costs for each phase of the construction process: site work, foundation, framing, exterior finishes, major system rough-ins, interior finishes, and final steps prior to a sale. The table spanning the following two pages can help guide readers to areas of opportunity in reducing costs throughout the supply chain or through regulations such as energy codes that increase construction costs.  

‍

Because the costs contained in this report don’t capture all the regulatory costs Washington builders face, we thought it prudent to provide an estimate until further data collection and analysis can be performed.  

‍

According to NAHB’s most recent analysis, regulations imposed by all levels of government account for 23.8% ($164,386) of the new home sale price. However, since we utilized market data for the counties included in this study, our estimates vary significantly from NAHB's estimate. Instead, approximately $203,976 (or 29.5%) of the median new home sales price ($690,701) are costs from local and state regulations. Essentially, Washington home builders face a rate of regulatory inflation of 5.7% compared to builders in other states. 

While a large number, we anticipate this is lower than reality, as our members routinely express frustrations with the following regulations:  

‍

• Labor regulations: Examples include excessive wildfire smoke exposure protections, unrealistic outdoor heat exposure protocols, and cumbersome sanitary conditions for construction workers on job sites.  

• Workers’ compensation: Examples include increasing the fee for employers or employees and allowing injured worker cases to stall, thus lengthening the time the worker is out of commission, hurting both the worker and the employer.  

• Impact fees: Fees collected on new construction for use in fire, traffic, parks, and schools. These fees are only authorized by law to pay for facility upgrades associated with new development. It’s important to note that these fees cannot be used for deficiencies in funding that are not attributed to new development.  

• Wetlands, shorelines, and critical areas: Washingtonians can all agree we love the natural beauty of our state, but one must wonder: Are there areas where we could reduce complexity to prevent so many families from being priced out of their ability to purchase a stable home or find an affordable apartment to rent in our beautiful state?  

• Land-use and building codes: Some academics claim zoning regulation reform without building and energy code reform will not reap the rewards promised. How the land is used is just one obstacle. A more significant hurdle to clear is making tangible improvements in the cost-effectiveness of our development, building, and energy codes.  

‍

While many can agree that these regulations are well intended, they have the unintended consequence of increasing the cost of delivering attainable housing units for Washington families. Each new regulation takes time and attention for reporting or compliance away from what builders do best: building new homes.  

‍

Of course, the figure for regulations doesn’t capture the potential cost increases we anticipate. New tariffs are set to be implemented in early March 2025, and a multitude of new labor standards will make their way out of the 2025 Washington Legislative Session.  

‍

‍

Construction Cost Breakdown - State Median New Home Price (2024)

‍

‍

‍

‍

Policy Considerations

‍

Regulations Increase Cost of New Homes

‍

Regulations are important and worthwhile in many cases. However, some are arbitrary and burdensome. One example is local parking regulations that mandate one, two, or more parking spaces depending on the type of structure built and its future uses. Some jurisdictions reduce the parking spaces required for single-family homes if a garage is constructed. In contrast, others do not count garage parking spaces in their definition of a parking space. If an extra one or two parking spaces (in addition to garage parking spaces) are required for a single-family home, that can add substantial cost.  

‍

Fortunately, the Washington State Senate passed Senate Bill 5184, also known as the Parking Reform and Modernization Act, sponsored by Sen. Jessica Bateman. We will advocate for passage in the House of Representatives as the 2025 Washington State Legislative Session advances.  

‍

Buildable Land in Short Supply

‍

Zoning regulations are only half the problem. Land availability is a large barrier to the ability of the private sector to build more housing units. Under the Growth Management Act, municipalities are required to complete a comprehensive plan every 10 years. A crucial element within this plan is the buildable lands inventory that determines how much land is available for each land-use designation. How municipalities count existing inventory and forecast population growth are just two factors that can influence how much land is set aside for housing units, commercial purposes, and other uses.

‍

Another bill introduced in the 2025 Legislative Session is House Bill 1096, sponsored by Rep. Andrew Barkis. This bipartisan bill is often coined “lot splitting” because it allows property owners to work with their local governments to administratively divide their existing parcel of land so that it can be sold and built upon. The proposed legislation aims to open more land in the urbanized areas where the Growth Management Act and other laws have indicated development should occur. This bill is crucial to ensuring ownership opportunities are preserved for Washington families.  

‍

A Workforce in Crisis

‍

The “College for All” message over the last 20 years has resulted in a Silver Tsunami—the term coined to describe the greying of the industry’s workforce and future retirements—has already begun, and as it continues, labor costs will continue to increase. The construction industry offers higher wages than service industries, and job growth in recent history has remained stable. Additionally, the construction industry offers more opportunities for entrepreneurs to own and operate a small business.

Unfortunately, HB 1777, sponsored by Rep. Suzanne Schmidt, was stalled in committee. This legislation would have reformed the Washington State Apprenticeship and Training Council to approve more training programs. A reform of this magnitude is desperately needed as the construction industry seeks to train future generations of the industry’s workforce. The current approval process is safeguarded by labor unions seeking to monopolize training opportunities to promote and protect union jobs. This is unfortunate because current training providers and apprenticeships have waiting lists of individuals wanting to access the skilled trades today – not in five years.  

One bill that would help alleviate – at least partially – the workforce shortage among jurisdictions is SB 5729, sponsored by Sen. Chris Gildon. If passed, any residential project that is designed by a licensed and insured design professional would automatically be deemed a complete permit application. This isn’t approval, but it should help speed up approval timelines overall by allowing local jurisdiction staff to focus on elements within the approval process, such as compliance with land-use regulations and critical areas, among other statutory requirements.