New home costs will likely continue to rise as rising building material costs squeeze construction budgets. Prices for goods used in home construction rose again in March and are up 8% since the start of 2022, reports the National Association of Home Builders citing data from the Bureau of Labor Statistics.
Year-over-year, building material prices have risen 20.4% and 33% since the start of the pandemic, NAHB reports.
Rising costs have led to an escalation in new home prices, which have risen 31% in three years. The average sale price for a new home was $511,000 in February.
Record high and rising lumber costs have been in the news lately, but signs of improvement offer some hope for homebuilders.
Lumber prices fell more than 6% to $829 per 1,000 board feet this week, the lowest of the year, Insider reports. Rising mortgage rates and a slowdown in do-it-yourself home renovations are dampening demand for lumber, Initiated said. Additionally, improvements are occurring in the supply chain that had hampered the lumber market for the past few months. Lumber prices have fallen 39% from their March high and are 52% below their May 2021 high of $1,733 per thousand board feet, Initiated reports.