The cost of constructing new homes has reached a record high, according to a recent National Association of Home Builders (NAHB) survey. Construction costs account for more than 64% of the average price of a new home, the highest percentage since the NAHB began tracking construction costs.

Construction costs were broken down into multiple categories. The biggest cost categories included:

  • Interior finishes (flooring, cabinetry, trim): 24%
  • Major system rough-ins (plumbing, piping, HVAC): 19%
  • Framing (roof, trusses, sheathing): 17%

Other major cost categories included exterior finishes (13%) and foundations (11%).

Such high costs can cut into your profits and make it more expensive to deliver high-quality homes to your buyers. Here are some cost-cutting strategies and best practices for these and other areas of construction.

Interior finishes

  • Opt for cost-effective options like laminate, vinyl or polished concrete instead of hardwood or natural stone. These materials can mimic the look of high-end finishes at a fraction of the cost.
  • Use alternative countertop materials like laminate or butcher block instead of granite or quartz. Engineered stone can also provide a durable, stylish look for less.
  • Use standardized fixtures for faucets, hardware and other equipment instead of custom or designer options. Many affordable brands offer stylish designs.
  • Reduce trim work by avoiding elaborate wainscoting and crown molding. Simple, clean lines can still look elegant and save on material and labor costs.
  • Leave certain areas, like basements or attics, unfinished for future upgrades, focusing the budget on essential living spaces.

System rough-ins

  • Locate equipment (furnace, water heater, oven) close to each other to minimize the amount of piping required.
  • For natural gas piping, consider using corrugated stainless steel tubing (CSST) instead of rigid black iron pipes. CSST is easier and faster to install, reducing labor costs.
  • Ensure the pipe diameter is appropriately sized for the appliances' needs to avoid overspending on unnecessarily large pipes.
  • Place HVAC units centrally to reduce the amount of ductwork needed and ensure efficient airflow throughout the home.
  • Coordinate the natural gas piping installation with other utility installations, such as plumbing, to reduce labor costs by having contractors work simultaneously.

Framing

  • Use a straightforward design with fewer corners, angles and complex roof lines. Simple rectangular or square shapes require less framing material and labor.
  • Consider efficient advanced framing techniques. Implement techniques like 24-inch on-center spacing (instead of 16-inch) for studs and align framing members with roof and floor joists to reduce material use without compromising structural integrity.
  • Avoid over-framing areas like decorative beams or excessive interior walls that don’t serve a functional purpose.
  • Opt for pre-cut studs or prefabricated wall panels and roof trusses to save on labor and reduce material waste.

For exterior finishes, use shapes and avoid intricate architectural details like complex trims, which can increase material and labor costs. Also, choose vinyl siding, one of the most affordable and durable exterior finish options.

To save foundation material and labor costs, design homes with a simple, rectangular footprint to minimize complexity and size. In addition, consider using precast concrete foundation panels, which are manufactured off-site and installed quickly.

Overall, it's important to plan carefully during each phase of construction to avoid delays, downtime, cost overruns and waste. Combining these strategies with good organization can cut costs significantly while maintaining quality.