Housing affordability is usually discussed as a construction-cost problem.
Materials cost more. Labour costs more. Financing costs more. Land costs more.
All of that is true.
But the latest research from the National Association of Home Builders points to another part of the equation that receives far less attention:
the cost created before construction begins.
In its 2026 study, Government Regulation in the Price of a New Home, NAHB estimates that government regulation now accounts for 26.4% of the final price of a new single-family home in the United States. Applied to the average new-home price used in the study, that represents approximately $131,734 per home.
That figure should get the industry’s attention.
But the deeper story is not simply that regulation costs money.
It is how those costs accumulate across development, review, coordination, compliance, delay and construction long before a buyer receives the keys.
More than $1 in every $4
NAHB’s research separates regulatory costs into two broad phases.
During lot development, regulation represents approximately 9.4% of the final home price.
During construction, it represents another 17%.
Together, that produces the 26.4% total.
In dollar terms, the study estimates approximately $46,795 per home is attributable to regulation during development, before the structure itself is built. Another $84,939 is attributed to regulation during construction.
Development-stage costs include zoning applications, required studies and fees, land that must remain undeveloped, design standards, labour-related requirements and delay.
This distinction matters.
If nearly $47,000 of regulatory cost is accumulating during development, then housing economics are already being shaped well before excavation, framing or concrete.
The first construction site is often the approval process.
The hidden cost is time
Perhaps the most important finding in the report is not the percentage of home price attributed to regulation.
It is the prevalence of delay.
94.2% of developers surveyed said regulatory compliance typically caused delay.
When it did, the delay averaged roughly seven months.
That has direct financial consequences.
Land does not stop costing money while a project waits.
Development loans continue accruing interest. Internal teams remain engaged. Consultants continue responding to comments. Capital remains tied up in land that cannot yet generate revenue.
NAHB’s assumptions reflect this financing reality: the study models 74% of land acquisition and development costs as debt-financed and applies a 7.545% interest rate to that capital.
The report also estimates an average 15.1 months from zoning application to the start of site work.
The implication is simple:
Time is not merely a project-management metric. It is a development cost.
And the earlier in the project that cost is incurred, the more consequential it can become.
NAHB’s own model estimates that a cost incurred when applying for development approval can ultimately require a 43.16% markup by the time it reaches the home buyer.
That is why seemingly small inefficiencies in pre-construction can have disproportionate economic consequences.
Not all regulation is the problem
This conversation requires an important distinction.
The NAHB report does not argue that all regulation is unnecessary or should be eliminated. It explicitly says that is not the study’s purpose. Its objective is to quantify the aggregate cost of regulation within a complex system of federal, state and local requirements.
Good development should be held to high standards.
Cities need to evaluate transportation, infrastructure, environmental impacts, servicing, safety, urban design and compatibility.
Developers need to demonstrate that projects comply with those requirements.
Municipal review is legitimate.
But legitimate review and avoidable operational friction are not the same thing.
A city asking a necessary planning question is one thing.
A municipality discovering that the parking count in the transportation report does not match the architectural drawings because one consultant worked from an earlier revision is another.
One is review.
The other is preventable rework.
The approval process still operates like a collection of documents
Development projects are increasingly complex.
A single submission can include architectural drawings, civil plans, transportation studies, servicing reports, landscape plans, environmental analysis, planning justification, municipal requirements and consultant responses.
Each discipline may perform its own internal quality control.
The problem is that the project itself exists between those disciplines.
A change in one drawing can alter assumptions in several reports.
A municipal comment can require a design decision that affects multiple consultants.
A revised site plan can make an older transportation analysis obsolete.
A response letter can claim an issue was resolved even though the supporting drawing was never updated.
Each document can be individually reasonable while the overall submission is still inconsistent.
That is where a significant amount of approval friction is created.
Not because professionals lack expertise.
Because the infrastructure connecting their work remains fragmented.
Municipalities inherit that fragmentation
This is not simply a developer-side problem.
Development teams assemble a submission across many outside consultants.
The municipality then distributes that same package across planning, transportation, engineering, urban design, utilities and other reviewing departments.
Both sides are trying to reconstruct the same project from different pieces of information.
When project context is lost, reviewers generate comments.
The development team interprets those comments, decides what to challenge or accept, sends work back to consultants, receives revised materials, and prepares another submission.
Then the municipality reconstructs the project again.
This cycle is necessary when substantive issues remain unresolved.
It is far harder to justify when the next cycle exists because information simply fell out of alignment.
Housing productivity cannot stop at the construction site
The construction industry has spent decades improving physical delivery.
BIM coordinates models.
Scheduling software manages critical paths.
Cost platforms track budgets.
Field technology captures progress.
Digital twins increasingly represent operating assets.
Yet much of the development approval process still depends on people manually reconciling PDFs, spreadsheets, emails, municipal comments and consultant revisions.
That creates an uncomfortable question:
Have we optimized the second half of housing production while leaving the first half largely manual?
Before a building exists physically, it exists as a network of drawings, reports, requirements, assumptions and decisions.
We can think of this as paper construction.
If paper construction is fragmented, physical construction starts later.
Sometimes it never starts at all.
The opportunity is not to eliminate review. It is to arrive ready for it.
There is a meaningful difference between making approvals faster and making projects more approval-ready.
Municipalities should continue to exercise professional judgment.
Developers should continue to respond to legitimate requirements.
What can improve is the quality of the information moving between them.
Before submission, development teams should be able to answer:
- Are every project’s key facts consistent across disciplines?
- Did the latest design change propagate through every dependent report?
- Has every municipal comment actually been addressed in the project, not just in the response letter?
- Are consultants working from the correct versions?
- Are unresolved decisions visible before filing?
- Are requirements supported by evidence?
- Is the package genuinely ready for review?
Those questions sound basic.
Today, answering them often requires experienced development managers to manually reconstruct the project across hundreds or thousands of pages.
That is not a policy problem.
It is an infrastructure problem.
Approval infrastructure should become intelligent
At Landvera, our view is that development approvals should eventually operate with the same rigor expected during physical construction.
Projects should be continuously understood.
Changes should be traced across dependencies.
Municipal comments should be connected to the underlying project decisions.
Consultants should know exactly what changed and why.
Before resubmission, the complete package should be verified again.
And over time, the knowledge generated through each approval should not disappear into an archived project folder.
It should compound.
A completed approval contains valuable intelligence:
- What did the municipality challenge?
- Which requirements mattered?
- What changed between review cycles?
- Which responses were accepted?
- Which issues persisted?
- How long did each stage take?
- What ultimately received approval?
Aggregated responsibly across projects, that history could eventually help development teams understand not just what the regulations say, but how they are applied in practice.
That moves the opportunity beyond workflow efficiency.
It begins to reduce one of the most expensive variables in real estate development:
uncertainty.
From approval operations to better investment decisions
The long-term implication reaches even further upstream.
Developers make major capital decisions before the approval process begins.
- Should we acquire this parcel?
- What density should we underwrite?
- How long should we assume entitlements will take?
- What municipal issues are likely to emerge?
- How have comparable projects been treated?
- How much approval risk should be reflected in the land price?
Today, much of that analysis relies on relationships, local expertise, precedent research and manually assembled public information.
A richer dataset connecting project characteristics, municipal requirements, review comments, revisions, decisions, timelines and eventual approval outcomes could make those assumptions much more informed.
In other words:
The approval workflow can become the dataset that improves the acquisition decision.
Every project can make the next investment smarter.
A housing affordability strategy needs both policy and execution
The NAHB report estimates the United States already faces a structural housing deficit of 1.2 million units.
Closing that gap will require more than one intervention.
Land availability matters.
Interest rates matter.
Construction productivity matters.
Labour matters.
Building codes matter.
Municipal policy matters.
But approval operations matter too.
The report’s conclusion is appropriately nuanced: several factors are contributing to rising housing costs, and meaningful affordability improvements will likely require addressing multiple components simultaneously.
That is exactly the point.
Improving housing economics is not only about removing rules.
It is also about building better infrastructure to navigate the rules that remain.
When regulation already represents 26.4% of the price of a new home, and development-stage regulatory costs average $46,795 per home, even modest improvements in predictability, coordination and review efficiency deserve serious attention.
Housing affordability begins long before construction.
So should the technology we use to improve it.