Rising construction costs are nothing new, and the cost of building a new home increases as time passes. Inflation, cost of materials, cost of labor, regulation, and many other factors drive these increases. As of this month, the cost of building a home in the United States has risen continually for 35 straight months. With interest rates remaining low, and demand for new properties increasing, it’s likely that costs will continue rising for the foreseeable future.
Ultimately, cost increases boil down to the basic laws of supply and demand. First, the supply of skilled construction labor. Fewer skilled craftsman means that the the prices they’re able to charge for services are higher. Coupled with increasing demand for new starts, it’s a profitable time to be a carpenter, plumber, or roofer.
Further, the cost of materials is rising. Wood, stone, steel, and other materials are simply costing more than they have in the past. However, there are some indications this is starting to decrease. For instance, the January 23rd CME futures prices for 1000 board feet of lumber is $308; the same time last year, it was $364. This is an indication that at least lumber production is finally reaching an equilibrium with demand.
We invite you to contact Leslie Saul & Associates for more information about the impact rising construction costs will have on your new home. We’ll be happy to answer your questions and to begin the process of planning the property you’ve always dreamed of building.