Here’s why Washington home construction costs surged ahead of national average

A new study on the cost of building homes in Washington has revealed steep construction prices that far exceed national averages, with regulatory hurdles playing the leading role in driving costs even higher. For homeowners and prospective buyers in Western Washington, these rising costs present serious challenges to affordability and availability in an already strained housing market.

The report, released by the Building Industry Association of Washington (BIAW), found that the average cost to build a single-family detached home in Washington is $309 per square foot. That translates to a median sales price of $690,701 for a newly built, 2,505-square-foot home. Meanwhile, townhomes — which are traditionally marketed as a more affordable option — are actually more expensive to build, averaging $404 per square foot, with a median sales price of $592,195.

To put these figures into perspective, the national average cost to build a home of similar size is $428,215, meaning Washington buyers are paying significantly more than the rest of the country.

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Why are Washington home construction costs so high?

A major contributor to these high costs is the price of raw land, which carries a median cost of $286,996 per lot in key counties like King, Pierce, Snohomish, Kitsap and Thurston. But beyond land and materials, builders and buyers are facing another financial hurdle: regulations imposed by local, state and federal governments.

According to the study, regulatory costs account for 23.8% of a new home’s final sale price, adding an estimated $164,386 per home. These costs stem from a variety of sources, including labor laws, workers’ compensation policies, land-use restrictions, and impact fees that are tacked on at various levels of government.

Washington’s strict labor and environmental policies are directly contributing to skyrocketing housing costs, the BIAW notes. Builders face costly requirements for heat and wildfire smoke protections, as well as excessive sanitary mandates for job sites. Workers’ compensation policies, which include lengthy case processing times and high fees, drive up employer costs that ultimately get passed on to buyers.

Local governments also levy impact fees on new developments to fund infrastructure improvements for roads, parks, and schools—costs that add thousands of dollars to each home. Meanwhile, strict zoning laws limit the amount of land available for development, and complex building codes increase construction costs, particularly energy efficiency mandates that push prices higher.

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Housing affordability can be addressed

BIAW President Kent Arola emphasized the consequences of these policies, stating, “Washington families are struggling to afford homeownership due to rising construction costs and burdensome regulations. We need smart policies that encourage housing development while keeping costs manageable.”

Lawmakers have introduced several bills that could help alleviate some of the regulatory burdens.

Senate Bill 5184, known as the Parking Reform and Modernization Act, aims to reduce arbitrary parking requirements that add unnecessary costs to housing developments. House Bill 1096, often referred to as the “lot splitting” bill, would allow property owners to divide their land more easily, increasing the supply of buildable lots in urban areas. Another measure, Senate Bill 5729, would speed up residential permit approvals, reducing costly delays for homebuilders.

Industry leaders are also calling for reforms to Washington’s apprenticeship and training programs to address the labor shortage in the construction industry. Current policies, they argue, allow labor unions to monopolize training programs, limiting the number of new skilled workers entering the workforce. This, in turn, drives up labor costs and slows down homebuilding.

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Is relief for Washington homebuyers on the horizon?

For prospective homeowners in Washington, buying a new home is becoming increasingly expensive, and relief isn’t coming anytime soon.

The BIAW says the state’s restrictive policies and high regulatory costs continue to push prices beyond the reach of many middle-class families. While legislative efforts to ease some of these burdens are in progress, market forces suggest that costs will remain high. New tariffs are set to take effect this month and additional labor mandates from the upcoming Washington legislative session are expected to further increase costs in the coming months.

In the meantime, buyers may need to look for existing homes rather than new construction or consider moving to areas with fewer regulatory constraints. The housing market in Washington remains a difficult landscape, and without meaningful policy changes, affordability will continue to decline, the BIAW argues.

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