Smaller Builders Report Higher Material Costs

Building material costs increased by 6.7% over the past 12 months, according to results from the survey for the July 2026 NAHB/Wells Fargo Housing Market Index (HMI).

A large majority (72.9%) of the home builders responding to the survey reported that their cost of materials for the same house increased by up to 15% over the past year. The most common response (28.4%) was that material prices increased by 5% to 9.99%, followed by 22.4% who indicated a less than 5% change, and 22.1% who indicated increases from 10% to 14.99%.

The median annual increase in the survey was 6.7% in material costs for the same house. This matches the 6.7% annual increase in in the price of goods (including energy) used in new residential construction in the July Producer Price Index. If energy is excluded, the PPI for goods used in new residential construction increased by 5% over that period.

How Does Business Size Impact Cost Increase?

Not all home builders experienced the same increase. According to the HMI survey, the median annual increase in material prices declines with the size of the builder: from a high of 9.1% for builders who started 5 or fewer homes in 2025, down to only 1.8% for builders with 100 or more starts.

Larger home builders may have greater ability to stockpile materials when they anticipate price increases. Larger builders may also have longer-term contracts with suppliers, locking in current prices for an extended period. Larger builders may also be more likely to have special relationships with certain suppliers, allowing them to negotiate deferred price increases.

Paul Emrath, NAHB vice president of survey and housing policy research, provides more insights in this Eye on Housing post.