Why Is New Home Construction So Expensive Today?
- 14 minutes ago
- 4 min read
As a custom residential builder and remodeler, we are often asked, “Why is new home construction so expensive?” It is a fair and reasonable question, and we thought it would be a good topic of discussion for this month’s blog article.
The short answer is that the construction industry has changed dramatically over the past decade. “We're seeing custom home builds averaging $600 per square foot, with some variation depending on project complexity, finishes, and site conditions,” explains Joseph DeSerrano, vice president of design and development.
Key Contributors to the Increase in Home Construction Costs
Rising Labor Costs
This is the result of simple economics: demand exceeds supply. Throughout the country, there is a shortage of skilled tradespeople (carpenters, electricians, plumbers, HVAC technicians, masons, excavators, finish crafters, etc.).
According to the Bring Back the Trades website, for every five tradespeople who retire, only two are entering the workforce to replace them. As our country continues to grow, the existing workforce simply cannot keep up.
Rising Material Costs
The National Association of Home Builders reports that in May of 2026, residential building material prices were 4.4% higher than in 2025, and up .7% from the previous month. This is the highest price increase since 2023.
A Demand for Larger, Higher-Quality Homes
In addition, today's homes are often larger, more efficient, and significantly more detailed than homes built decades ago, and features that were once considered luxury upgrades are now common elements, including:
Custom kitchens
Large islands
Walk-in pantries
Tile showers
High-end appliances
Built-in cabinetry
Extensive trim packages
Smart home technology
Energy-efficient construction (mechanical) systems
“Many homeowners understandably compare today's construction costs to those of yesterday, but it's important to recognize that consumer expectations regarding overall build quality, performance, location, and level of finish have increased substantially,” Joseph points out.
A Note About Site Conditions:
When it comes to building a new home, site conditions matter more than most people realize. Two different people could build the same home at two entirely different price points because of varying site characteristics.
Site Factors That Can Increase the Cost of Construction:
Sloping terrain
Ledge removal
Poor soil
Long driveways
Utility installation distances
Septic system requirements
Well drilling depth
Retaining walls
Drainage challenges
Reducing the Cost of New Home Construction
While many factors are outside of your control, there are some ways to reduce the cost of new home construction without sacrificing quality:
Understand How You Live
“When the price of a residential construction project exceeds a client’s expectations, one of the first things we look at is the home's size,” Joseph says, noting that he and his team often encourage clients to read “The Not So Big House: A Blueprint for the Way We Really Live” by Sarah Susanka. This book explains how understanding your lifestyle and your family's needs helps determine the ideal size and design of your home.
Applying These Principles at Cormack: Our designers can work with clients to gather inspirational materials (photos and other imagery) for their project. From there, we utilize a residential building program to collect information on the desired number of rooms and finish levels. Based on this information, we develop a set of schematic drawings.
Work With a Design-Build Firm
One of the most effective ways to control construction costs is to work with a design-build firm like Cormack Construction Management. Unlike the traditional approach—where homeowners hire an architect first and then seek construction bids—a design-build firm manages both the design and construction process.
How we Work: Our design-build team provides budgeting guidance throughout the design phase, helping our clients understand how decisions regarding size, layout, structural complexity, and finish selections affect the overall project cost.
“We strive to get out in front of any concerns regarding project cost as early as possible through a collaborative process that helps streamline communication, identify cost-saving opportunities early on, and keep the project on schedule,” Joseph notes.
Keep Your Foundation Simple
Opting for a simpler foundation design can provide significant savings. Complex foundations, walkout basements, multiple elevation changes, and large retaining walls all add cost.
Minimize the Structural Complexity of Your Home
It goes without saying that every bump-out, dormer, corner, roof transition, and cathedral ceiling adds labor and material costs. Selecting a simple building shape is a cost-effective way to construct a new home while often providing a timeless architectural appearance.
Be Strategic With Your Finish Selections
Save your high-end finish selections for where they matter most. For example, investing in high-quality custom kitchen cabinetry or windows installed in central living areas may provide a greater long-term value than selecting the most expensive finish option for every room.
“We pride ourselves in helping our clients prioritize where premium materials will have the greatest impact while identifying opportunities to save money elsewhere,” Joseph explains.
We’re Here to Help You Make Informed Decisions
Construction costs are higher today, but our design-build team is here to help you thoughtfully plan your project and make the right design decisions for your long-term goals and budget.
Custom Home Building & Remodeling in NH’s Lakes Region, White Mountains & Western ME
Please contact us today to discuss your home building or remodeling project with our design-build experts.
