A comprehensive survey from the National Association of Home Builders finds that government mandates add $132,000—or about 26%—to the purchase price of a new home in 2026. The report, which surveyed land developers and home builders across the country, examined how federal, state, and local regulations inflate the cost of housing, from direct fees to indirect delays. The analysis looked at the current average price of a new home, pegged at $499,500, and broke down how much comes from regulatory costs.
The survey identifies specific costs tied to different types of regulations. Recent building codes add $40,288 to the price, the largest single category. Building fees contribute $20,154, while design standards add $16,117. Government land ownership accounts for $13,593, and compliance costs like land fees and studies add $10,755. Land standards such as setback requirements contribute $10,583, OSHA and labor rules add $9,125, and zoning approvals cost $7,007. Other delays round out the list at $4,112. Together, these categories total $131,734, or 26.4% of the total cost of a new home.
According to the Mackinac Center's analysis of the report, "this is not the total cost of government regulation to the home." The report notes that federal tariff policies make building materials more expensive, and state occupational licensing rules limit the supply of workers. The analysis also points out there's "no way to capture the full effect of zoning rules," since the survey only measures costs for zoning approval—not the broader impact of municipalities restricting most areas to single-family homes only.
The report explains that regulatory costs come in multiple forms that compound housing prices. Direct costs like permit fees are straightforward, but indirect costs—such as when permitting delays force changes to interest rates on project financing—are harder to track. Zoning restrictions present an especially complicated challenge: while prohibiting certain types of buildings doesn't directly add construction costs, it still makes prices higher in the real estate market. The analysis cites national studies showing that strict zoning laws are associated with higher housing costs, in some areas increasing prices by 40%, while loosening zoning rules is strongly associated with lower housing costs. The report suggests its findings likely underestimate the true regulatory burden because many restrictions—especially zoning's effect on limiting housing types—can't be fully measured.
The Mackinac Center concludes that Michigan needs "a mindset of entrepreneurship and growth" to address housing affordability, pointing to the approach that originally built the state. The report argues that the current "myriad of rules, regulations and restrictions" has caused building prices to skyrocket over time and made it harder to live and improve communities. With over a quarter of a new home's price coming from regulatory costs—and the real number likely higher—the report makes clear that government mandates at every level have become a major driver of the housing affordability crisis.