Residential construction costs in the U.S. Q1 2024, by city

In the first quarter of 2024, San Francisco, New York, and Honolulu were some of the U.S. cities with the highest housing construction costs. Meanwhile, Phoenix had one of the lowest construction costs for multifamily homes at 218 U.S. dollars per square foot and Las Vegas and Portland for single-family homes between 180 and 275 U.S. dollars per square foot.

Construction cost disparities

As seen here, the construction cost for a high-end multi-family home in San Francisco in the first quarter of 2024 was more than twice expensive than in Phoenix. Meanwhile, there were also great differences in the cost of building a single-family house in New York and in Portland or Seattle. Some factors that may cause these disparities are the construction materials, installation, and composite costs, differing land values, wages, etc. For example, although the price of construction materials in the U.S. was rising at a slower level than in 2022 and 2023, several materials that are essential in most construction projects had growth rates of over five percent. Other challenges affect the industry overall, such as construction material shortages, which were very important in 2021 and 2022.

Growing industry revenue

Despite the economic uncertainty and other challenges, the size of the private construction market in the U.S. rose during the last years. It is important to consider that supply and demand for housing influence the revenue of this segment of the construction market. On the supply side, single-family home construction fell in 2022 and it is expected to also decrease in 2023. On the demand side, some of the U.S. metropolitan areas with the highest sale prices of single-family homes were located in California, with San Jose-Sunnyvale-Santa Clara at the top of the ranking.