Building Costs Skyrocket Over the Past 12 Months

Building material costs have soared 26.1% on average over the past 12 months, according to a recent survey of single-family builders asking how much costs have increased for the same house over the last year. It's no coincidence that this same May survey for the NAHB/Wells Fargo Housing Market Index reveals that a record number of builders reported material shortages across the board. A plurality of builders (28%) reported that material costs increased by 20-30% over the past year. Another 15.9% indicated  that costs increased by 30-40%; 5.9% said costs rose by 40-50% and 15.2% indicated that their costs had soared by 50% or more. On average, the 12-month increase in material costs for the same house was 26.1%, by far the highest percentage cost increase ever recorded in an NAHB survey. The previous record was 6.1% in 2017. Material availability and costs are one of several factors, including the cost of regulation and a general shortage of construction labor, limiting the supply of housing, particularly for the entry-level market where additional inventory is badly needed. NAHB Senior Economist Paul Emrath provides more analysis in this Eye on Housing blog post.