Did you know? The National Association of Home Builders says rising lumber prices alone have added $24,000 to the cost of building the average single-family home and about $9,000 per apartment. After land and labor, lumber is one of the biggest costs in home building. With this said, lumber has never been more expensive at more than twice the typical price for this time of year. While lumber tends to get most of the blame for rising new home construction costs, it is certainly not the only culprit.
Other culprits for rising costs
For starters, we all know how high fuel prices have gotten already in the first few months of the year. In addition to adding to transportation costs, rising crude oil prices also impact paint, drain pipes, roof shingles and flooring. Crude oil is a starting point for these and other materials, which has caused prices to increase by approximately 80% since October. Copper, which is used for water pipes, currently costs about a third more than it did just six months ago. Materials such as drywall and ceramic tile have also increased substantially in recent months.
Of course, many Americans have opted to take on home remodeling projects since the start of the pandemic. This increased demand for building/remodeling materials has made it increasingly difficult for manufacturers to keep up with adequate supplies. Not surprisingly, building permits for residential construction are being issued at the highest rate since 2006.
It is certainly not all gloom and doom for new construction though. For starters, mortgage rates are still at historically low levels. This has helped offset the increase in cost of building materials. In addition, many families have been able to benefit from lower household spending overall throughout the pandemic. Federal stimulus checks have also helped some Americans save money for either a down payment on a home or for building expenses. New construction homes typically will benefit from reduced insurance costs depending on materials used and the manner in which the home was built. Add in additional savings due to energy efficiencies of new construction and home owners are able to recoup some of their additional entry costs.
As with any decision, the more knowledge you have the better the outcome will be. At Live South Florida Realty, Inc. we provide the concierge-level service necessary to make informed decisions. Whether you are buying a new construction or existing home, we can help. Contact us today!