Construction Costs Should Predict Housing Prices Across Cities. They Don’t. Here’s Proof.

Research analyzing 75 years of data shows that construction costs—materials, labor, and builder profits—have little impact on housing prices across U.S. cities. Since the late 1970s, housing prices have outpaced building costs, with cities like Miami having prices nearly double expected levels, while Chicago's are about half. Regional affordability is driven mainly by factors beyond construction expenses.