When people talk about why housing is so expensive to build, the conversation usually gravitates toward lumber prices, labor shortages, and interest rates. Those factors are real. But there is another cost driver that rarely gets the attention it deserves: the approval process itself. The time it takes to navigate zoning reviews, permit applications, impact fees, and public hearings is not just an inconvenience. It has a measurable dollar value, and that value gets passed directly to the homebuyer.
This piece builds on our earlier look at zoning reform across the country. Here, we go a level deeper into the numbers.
The National Association of Home Builders (NAHB) has tracked the cost of regulation embedded in new home prices for years, and their findings are striking. Regulation imposed by all levels of government accounts for roughly $93,870 of the cost of an average new single-family home. That breaks down across building code changes, lot fees, site work requirements, land dedications to government, and mandated architectural details that exceed what a builder would ordinarily include.
For multifamily development, the picture is even more acute. Regulation accounts for an average of 40.6% of total multifamily development costs. In high-cost states like Washington, one 2025 study found that regulatory costs represent approximately 29.5% of the median new home sale price, or roughly $204,000 per home.
Every month a project spends in the approval pipeline is a month a builder is carrying land, financing, and staffing costs without generating revenue. That carrying cost compounds fast.
NAHB data shows builders report an average of 13.1 months between applying for zoning or subdivision approval and receiving clearance to begin site work. Complying with regulatory requirements adds an average of 6.6 additional months on top of that. Nearly 20 months before a shovel reliably hits the ground.
A permit application for a complex residential project typically requires sequential sign-off from multiple independent departments: planning, public works, fire safety, utilities, traffic, and environmental review. Each operates on its own timeline. A single comment from one department can restart an entire review cycle. A legal challenge filed under state environmental review law can hold a project in limbo for years, regardless of merit.
The result is a system where approval timelines can vary enormously with no relation to project complexity. Research analyzing the country's largest metros found that a permit approval process that takes eight days in one city can take nearly a year in another. That gap is not about the project. It is about how the jurisdiction has structured its process.
As we outlined in our piece on state-level zoning reform, the most effective reforms share a common design principle: if a project meets published standards, approval should be automatic and timely. Replacing discretionary votes with objective, criteria-based review does not mean less oversight. It means more predictable oversight, which is what responsible development actually requires.
For builders, timeline certainty often matters more than a modest fee reduction. A project that moves from application to shovel-ready in 90 days rather than 18 months is a fundamentally different financial proposition, and one that can support a meaningfully lower final price for the buyer.
The cost of regulatory delay is not a line item most homebuyers ever see. But it is embedded in every price. For a broader look at who bears that burden most, see our piece on Millennial and Gen Z homeownership barriers.
For informational purposes only. Not an offer to sell or a solicitation to buy securities.
