What goes into the price of a new home isn’t always obvious.
For many homeowners, it’s easy to point to labor or materials as the main drivers. But for builders in the Louisville area, the reality is more complex. A series of smaller decisions—ranging from infrastructure to regulations—can quietly add thousands of dollars to the final price.
A change to a local sewer system. A requirement for wider roads. Additional development standards. On their own, each may seem minimal. Together, they can significantly impact what a buyer ultimately pays for a home.
“It comes down to the end user, who’s going to have to pay more for a house,” said Trevor Brown of Trevor Brown Construction and President of the Building Industry Association of Greater Louisville. “Regulatory agencies rarely consider the impact of their new regulations on the final cost of a home. The result is every agency continues to add regulations, which go unchecked for so long that the next thing you know, the home isn’t affordable anymore.”
The Cost of Regulation
In today’s market, builders are navigating a steady increase in requirements that influence both construction and development.
Regulations and scarcity have driven up the cost of buildable land, while elevated interest rates have made it more expensive to borrow money. According to the White House, regulations alone can add up to $100,000 to the cost of building a home.
Some regulations are intended to improve safety or efficiency—but they can also carry a significant price tag. In many cases, those added requirements can increase construction costs by tens of thousands of dollars.
Builders say the challenge isn’t any one rule—it’s the accumulation over time.
These requirements also affect land development. Minimum lot sizes, tree preservation rules and other local mandates can limit supply and drive up land prices before construction even begins.
“We wish we could build $200,000 houses all day, because we know they would sell and there is a need for that. But we cannot - not with the price of lots, labor, and material costs,” said Chase Thieneman of Clifford Thieneman Co. and Vice President of the BIA of Greater Louisville. “Then you get into development, and you’re told how big the house has to be, and you have to keep up with all the regulations and permitting. We want to build a safe, quality house that people can afford. But where is that line?”
A Tight Labor Market
At the same time, labor shortages are putting additional pressure on pricing. Labor costs have risen simply because there are not enough skilled workers available, adding to the price of both new construction and remodeling projects.
“We’re limited on plumbers, we’re limited on trim carpenters, we’re limited on HVAC contractors,” said Thieneman, a third-generation builder. “And when we’re limited on trades, it drives the cost of that trade up.”
The National Association of Home Builders (NAHB) estimates the industry will need 2.2 million new skilled construction workers over the next three years to meet demand, replace retirees and account for industry growth.
“We’re a graying industry,” said Juva Barber, Executive Vice President of the Building Industry Association of Greater Louisville. “As people age out, we don’t replace them. But there are hundreds of available jobs in construction—and they cannot be outsourced to AI.”
Global Forces Hit Local Projects
Since the COVID-19 pandemic, material costs have remained unpredictable, influenced by global supply chains, tariffs and economic conditions.
The cost of steel products has increased 77 percent since 2020, according to the NAHB, while gypsum materials are up 48 percent, concrete has risen 33 percent and brick 29 percent. Framing lumber is also more expensive than in recent years. Even transportation costs play a role, as higher fuel prices increase the cost of delivering materials to job sites.
“Prices for lumber, steel, drywall and concrete have all climbed significantly, and they remain unstable,” Thieneman said. “Disruptions from global events and tariffs can make it harder and more expensive to secure materials, and those increases get passed along to the homeowner. One world event can affect so many things.”
Higher interest rates are also impacting overall project costs. Brown said the current rate environment can add $15,000 or more to a construction loan, on top of origination fees, appraisal costs and other expenses associated with financing a home.
The Impact on Homebuyers
All of these factors—from regulation and labor to materials and interest rates—ultimately show up in the price of a home.
In Jefferson County, 67 percent of households already cannot afford the median new home price of $365,119, according to the NAHB. Adding even $1,000 more to that price point would push an additional 2,112 households out of the market in Kentucky.
In that environment, builders say clear communication is essential.
“You have to communicate early and often,” Barber said. “The public is smart—they know what’s happening in the marketplace.”
Advocating for Housing Affordability
As these pressures continue to mount, the Building Industry Association of Greater Louisville plays a key role in advocating for solutions for local homebuyers and remodelers.
The organization works with local and state leaders to highlight how regulations and policy decisions impact housing affordability—while supporting builders who are working to deliver safe, quality homes.
The BIA also serves as a resource for homeowners navigating the building or remodeling process, helping connect them with experienced professionals and better understand the factors influencing cost.
“We’re the eighth largest association in the country,” Thieneman said. “When we talk, people listen. The BIA is there to advocate on our behalf on all of these issues.”
With demand for housing continuing to grow, addressing affordability will require a balance—maintaining safety and quality standards while keeping costs manageable for buyers.
Interested in more information on home building costs, or looking to connect with a vetted professional for your next project? Contact the Building Industry Association of Greater Louisville at (502) 429-6000 or visit BIALouisville.com.
