Regulatory compliance costs for new homes climb significantly.
Story By Tracy Dickinson | September 2026
Anyone in any field related to home building is well aware of the constantly rising costs of government regulation for new construction.
The National Association of Home Builders (NAHB) recently published results of a Special Study for Housing Economics that reveals on a typical new home (currently averaging $499,500 nationally), “regulation accounts for $131,734 of the final house price.”
While Iowa may not see quite those same numbers, the percentages are certainly comparable.
“The cost of government regulation has gone up significantly in the past 2 years,” says Dan Knoup, Executive Officer of the Home Builders Association of Greater Des Moines (DSM HBA). “In Iowa it’s risen from 24% to 26% of the cost of a new home.”
Regulation in and of itself is not the primary concern for most home builders and land developers.
Hubbell Realty Company’s Rachel Flint says, “Builders are not opposed to regulation. Like our clients, we’re homeowners. We’re neighbors. We pay taxes. We want to be sure we’re advocating for regulation that offers some sort of payback to the homeowner, whether that’s financial or safety-related, not regulation that’s manufacturer-driven.”
Mike Nigro of Jerry’s Homes says, “When it comes to protecting lives, regulation makes sense. But we’ve seen a number of code regulations that are clearly more product-driven, and those just seem to add cost without much benefit to the homeowner.”
Some regulatory costs are statewide requirements affecting every new home, no matter which community it’s in. But each municipality adopts its own building codes and regulations, often adding even more costs to the price of a new home.
“A lot of the regulatory costs are on the development side, which affects the lot prices,” Nigro says. “For a builder, that means we can build the exact same house in two different communities, and one will cost thousands more because of those extra requirements.”
Flint agrees. She says, “We did a study at Hubbell addressing ways to reduce regulatory costs. Our goal is to help develop a consensus among everyone involved—builders, developers, legislators, city leaders. The last thing any community wants is to not grow. The more expensive it gets to develop land and build in a community, the less likely it is to grow.”
DSM HBA and the NAHB continue to advocate for code reform and have seen some success from those efforts.
“We’ve been working to encourage local municipalities to align so that codes are more uniform from one community to another,” says Knoup. “And we recently held an educational session with developers to discuss the causes and concerns regarding regulatory costs and their effect on home prices.”
Although Knoup, too, says manufacturers may often have undue influence on the way codes are written, he has also seen positive results from construction industry advocacy. “As with things like trends and sales activity, Iowa doesn’t see the same extremes in regulation that we see on the coasts. For example, there’s a ban on natural gas on the coast, but our legislation didn’t approve that because that doesn’t make sense for Iowa.”
Flint says there have also been instances where updated code actually reflected practices Hubbell had already followed for years. “In July the Iowa Legislature passed a law requiring passive radon mitigation systems in new homes,” says Flint. “That may be a new cost for some builders, but Hubbell Homes has been doing that for a decade at no cost to the buyer. That’s just something we provide because it was a priority for us to protect home buyers.”
Both Flint and Nigro say the safety concerns behind much of the regulation are laudable and those concerns such as radon mitigation and basement waterproofing are issues that builders support as well. But code regulations that provide little to no benefit to the homeowner while adding unnecessary costs are another matter.
“Politics drives a lot of these code changes,” Flint says. “The lobbying arm of manufacturers is strong, and that can be a bigger factor in code updates than anything else.”
“It’s a challenge to balance costs with customer expectations,” Nigro says. “Smaller square footage is one way to do that, but you can only do that within reason. Home buyers expect a certain size and amenities, and it’s not easy providing that when costs are rising the way they have been.”
Flint says, “All these layers of regulation have added up, and individual communities are beginning to recognize that. We’ve been encouraged by the way local municipalities have reached out to try to bring more housing to their communities, looking for ways to work with builders and developers to accomplish that.”
Until further change is achieved, regulatory costs compound the problem of rising home prices.
“Sometimes it feels like death by a thousand cuts,” says Nigro. “We’re required to install drywall in unfinished basements and have a power shut-off outside the house even though most firemen are unaware it exists. And homeowners don’t have any say in those types of decisions.”
Knoup says that the DSM HBA advocates for practical codes and regulations where the homeowner can see payback within 7 years. However, it’s hard to see the benefit for the homeowner when regulation requires decades before costs are recovered. “When those things are optional or recommended, that’s great,” Knoup says. “But when they’re required, no.”
The NAHB study indicates that the cost of regulation has more than doubled in the past 15 years. And while local builders and developers, as well as the DSM HBA, are not in favor of eliminating regulation, the complicated system that layers local, state, and federal regulations onto every new home does not count the true cost of those policies.
The homeowner is not the only one covering the tab. Builders, developers, and communities struggling to grow are all paying the price.