Chicago Construction News staff writer
Construction costs for new homes in Chicago remain among the highest in the world, ranking 11th globally in a new analysis of residential building prices across 67 major cities. The findings place Chicago at an average of $2,665 per square metre, with costs rising 3.8% year-over-year from 2025 to 2026.
The report, compiled by Compare the Market, highlights how U.S. cities continue to dominate the upper tier of global construction expenses, driven by labour shortages, materials inflation, and sustained demand for urban housing.
At the top of the global list is Hong Kong, where construction costs reach more than $6,200 per square metre. In the United States, Honolulu ranks second globally at $3,417.50/m², followed closely by Portland at US$3,392.50/m².
Other major U.S. metros also appear in the top tier, including New York, Boston, San Francisco, and Seattle—all exceeding $2,900 per square metre.
In Chicago, the study places construction costs slightly below other major coastal hubs but still well above the global average, underscoring the city’s continued position as a high-cost urban build environment despite its Midwestern location.
While Chicago’s annual increase of 3.8% is among the lower growth rates for major U.S. cities, it still reflects steady upward pressure across the market. By comparison, cities such as Nashville recorded some of the strongest increases at 4.8%, while Honolulu saw the steepest rise at 5.6%.
Other U.S. markets including Los Angeles, Washington, D.C., Denver, and Seattle all posted mid-range increases between roughly 4% and 4.6%.
The report suggests that even in markets with slower growth—like Chicago and San Francisco—builders and developers are still contending with persistent cost pressures that continue to push baseline construction budgets higher year after year.
At the lower end of the global rankings, cities such as Austin stand out as relatively more affordable U.S. construction markets, with average costs under US$2,000 per square metre. That contrast highlights a widening gap between high-cost coastal metros and lower-cost Sun Belt regions.
Globally, Southeast Asian cities such as Ho Chi Minh City, Manila, and Kuala Lumpur remain the least expensive places to build, with costs a fraction of those seen in U.S. markets.
The study also underscores the financial risks tied to rising build costs. Adrian Taylor, Chief Executive of General Insurance at Compare the Market, warns that homeowners often underestimate the impact of construction inflation on insurance coverage.
“When making any changes that impact the value of your home, your insurer needs to be informed. If you’ve renovated or added an extension to the building, then the value may have increased, so the amount insured may need to increase as well,” Taylor said.
“If this amount is inaccurate or out-of-date, your insurer might not cover the full cost, and any remaining expenses to rebuild your home will need to be paid by you.”
For Chicago, the data points to a market that remains structurally expensive even without the extreme spikes seen in coastal cities. With labour costs stabilising but materials and compliance costs still elevated, analysts expect construction pricing in Chicago to continue rising modestly into 2027.
For more information click the link: https://www.comparethemarket.com.au/home-contents-insurance/features/building-costs-around-the-world/
