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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.
