New-home costs likely will continue to increase as rising building material costs squeeze construction budgets. The prices of goods used in residential construction rose again in March and are up 8% since the start of 2022, the National Association of Home Builders reports citing Bureau of Labor Statistics data.
Year over year, building material prices have increased 20.4% and have risen 33% since the beginning of the pandemic, the NAHB reports.
The rising costs have prompted escalating new-home prices, which have increased 31% in three years. The average sales price of a new home was $511,000 in February.
The record high and the rising costs of lumber have made headlines recently, but signs of improvement offer some hope to homebuilders.
Lumber prices dropped more than 6% to $829 per 1,000 board feet this week, the lowest of the year, Insider reports. Higher mortgage rates and a slowdown in DIY home renovations are easing demand for lumber, Insider says. Also, improvements are occurring in the supply chain that had bottlenecked the lumber market over recent months. Lumber prices fell 39% from their March high and are 52% below their May 2021 peak of $1,733 per thousand board feet, Insider reports.