A picture of someone using a notched trowel to smooth out cement.

New-home buyers are facing higher prices, and a big reason is escalating building costs. Building material prices are up 19% over a year ago, according to a report from the Bureau of Labor Statistics. Material costs have jumped by about 36% just since the pandemic began. Many builders are passing on those higher costs to home buyers.

The price of a new home continues to climb and reached a median sales price of $436,700 in March. That is up 21% compared to a year ago, according to the Commerce Department. Only 14% of new-home sales in March were priced below $300,000. A year ago, it was 34%. Builders have cited higher development costs and materials as the main reasons for the price jumps.

The rises in material costs continue even as softwood lumber prices take a pause from recent record highs. Read more: Lumber Prices Tumble to Lowest Level of 2022

But the costs of other products necessary to build a home continue to soar, such as steel mill products, ready-mix concrete, and gypsum products, which are used for drywall.

A line graph charting the difference between the rise in costs of food and services.

 

Notice: The information on this page may not be current. The archive is a collection of content previously published on one or more NAR web properties. Archive pages are not updated and may no longer be accurate. Users must independently verify the accuracy and currency of the information found here. The National Association of REALTORS® disclaims all liability for any loss or injury resulting from the use of the information or data found on this page.