Topic hub
Construction Costs
Materials, labor and land are the obvious inputs. The less obvious ones are statutory, and they compound: each is defensible alone, and together they price out the buyer at the margin.
The short answer
The cost of a new house is not set by construction technology alone. A substantial and growing share is policy: trade duties on inputs, wage mandates on federally funded work, energy codes, impact fees levied at permit, and liability regimes that make certain building types uninsurable to construct.
None of these is hidden, but none appears as a line item on a closing statement either. They arrive as a higher price.
Tariffs are an excise tax on housing supply
Duties on lumber, steel and aluminium are paid by whoever builds with them. Canadian lumber has faced combined duties above 45%; metal molding and trim rose 61.7% year over year; building material inputs rose 3.4% in a single period. The aggregate lands around $10,900 added to every new home, with estimates ranging to $13,000 depending on the basket.
Because the duty applies at the input stage, it raises the cost floor beneath every unit built, including the affordable ones that subsidy programs are separately paying to produce.
Mandates on labor, energy and liability
The Davis-Bacon Act requires federally funded construction to pay prevailing wages measured about 22% above market, which raises the unit cost of precisely the affordable housing the federal government funds. Energy codes under the 2021 IECC add up to $31,000 per home, with payback periods reaching 90 years for the buyers least able to finance the upfront cost.
Construction defect liability is the starkest case: it did not raise the price of condominiums so much as end their production, with a 90% collapse in California condo output and 84% of Colorado's condo developers leaving the market. The starter home that does not exist has no price.
The cluster
All 5 pieces in Construction Costs
- The Tariff Tax on Housing: How Trade Protectionism Inflates the Cost of Every New HomeBuilding material costs rose 41.6% since the pandemic. Lumber tariffs now exceed 45% on Canadian imports. Tariffs add $10,900 to every new home — a hidden tax on America's housing shortage.
- Built to Cost More: How the Davis-Bacon Wage Mandate Prices Affordable Housing Out of ReachThe 1931 Davis-Bacon Act forces federally funded construction to pay wages 22% above market rates, directly inflating the cost of every affordable housing unit government funds.
- The Green Code Tax: How Federal Energy Mandates Are Pricing First-Time Buyers Out of New HomesFederal energy mandates under the 2021 IECC add up to $31,000 to every new home, with payback periods as long as 90 years for buyers least able to afford it.
- The Lawsuit Tax on Starter Homes: How Construction Defect Liability Laws Gutted the Condo MarketConstruction defect liability laws have triggered a 90% collapse in California condo production and eliminated 84% of Colorado's condo developers. The data shows exactly who pays the price.
- The Impact Fee Trap: How Local Government Levies Are Pricing First-Time Buyers Out of New HomesThe average impact fee hit $16,394 per new home in 2024, adding nearly $20,000 to the purchase price and pricing out millions of first-time buyers. A free-market analysis of a hidden housing tax.