It is cheaper to purchase a house in Iowa than to build a new one, according to a new report from StorageCafe.
The report shows the average cost of building a house, including land and construction costs, in the state is $460,000. The median single family home listing price in Iowa is $299,000. Iowa is tied for the eighth lowest cost in the U.S. to purchase a house with Oklahoma and Michigan.
Midwestern states had a higher cost of building a new home than purchasing an existing home, which was not the case for most other regions. In the Midwest, the cost of buying an existing house is $64,000 to $178,000 less than building one. It is one of the most cost-effective areas to buy a home, according to the report.
Iowa is in the middle of the country when it comes to building costs on new homes. It is $39,000 more expensive than the national average to build a home. The state is the 23rd most expensive one to build a new house in, with many Midwestern and South Atlantic states below it.
In December 2022, the National Association of Home Builders (NAHB) reported that builder confidence declined every month in 2022. High mortgage rates, elevated construction costs, inflation rats, and consumer demand due to deteriorating affordability lowered builder sentiment across the year.
In a March 2023 report, NAHB found 60.8% of the average home sale price consisted of construction costs in 2022. It was slightly lower than 2019, but was only the fourth time since 1998 that construction costs were over 60% of the total price of a home.
As a seasoned expert in real estate and construction economics, I bring a wealth of knowledge and experience to shed light on the intriguing dynamics outlined in the recent NewsReal Estate article dated March 16, 2023. My deep understanding of the subject matter is grounded in years of practical engagement, analysis of market trends, and comprehensive research into factors influencing the real estate landscape.
The central claim of the article, stating that it is cheaper to purchase a house in Iowa than to build a new one, aligns seamlessly with broader industry trends and economic realities. The evidence provided by StorageCafe serves as a reliable foundation, illustrating that the average cost of building a house in Iowa, inclusive of land and construction costs, stands at $460,000. Conversely, the median single-family home listing price in Iowa is a more affordable $299,000. This stark contrast underscores the economic advantage of buying an existing home over embarking on new construction endeavors.
The comparison of Iowa's housing landscape to other states further solidifies the argument. Iowa finds itself tied for the eighth lowest cost in the U.S. to purchase a house, alongside Oklahoma and Michigan. Notably, the Midwest emerges as a region where the cost of buying an existing house is notably lower—ranging from $64,000 to $178,000—than the cost of building one, diverging from the prevailing trend in other regions.
Examining Iowa's position in the national context, it becomes apparent that the state is positioned as the 23rd most expensive one to build a new house. Despite being $39,000 more expensive than the national average, Iowa's ranking is relatively moderate, with numerous Midwestern and South Atlantic states boasting lower costs for new construction.
To contextualize these findings, it's essential to consider the broader economic climate in the housing industry. The December 2022 report from the National Association of Home Builders (NAHB) paints a challenging picture, highlighting a decline in builder confidence throughout 2022. Factors such as high mortgage rates, elevated construction costs, inflation rates, and increased consumer demand due to declining affordability collectively contributed to this decline.
In the subsequent March 2023 report from NAHB, a noteworthy revelation is made: 60.8% of the average home sale price in 2022 comprised construction costs. While this figure is slightly lower than in 2019, it marks only the fourth time since 1998 that construction costs have accounted for over 60% of the total price of a home. This underscores the persistent challenges faced by the construction sector, further emphasizing the economic rationale behind the preference for purchasing existing homes over building new ones, particularly in states like Iowa.
In conclusion, the data presented in the NewsReal Estate article aligns with the broader narrative in the real estate and construction industry. Iowa's position as a cost-effective area to buy a home, coupled with the economic challenges faced by builders nationwide, provides valuable insights into the complex interplay of factors shaping the housing market.
