Cost of Materials To Build
Whether at a party or with a client, we often get asked about the rising cost of materials to build. Sometimes, people want to know about the cost of materials to build a whole house, sometimes they’re curious about a smaller project, but this is definitely a topic on a lot of minds … ours included.
We find that clients are working harder than ever to make a project work within their budget. We also have our work cut out for us to research best prices and source materials needed, both of which have gotten harder over the last few years.
It’s no secret that the pandemic led to supply chain issues that have trickled down to a lot of different areas. While there are many factors that contribute to rising costs (we are not economists), almost every person can attest to the fact that prices are indeed rising and shortages are a real thing. Let’s take a look at what is truly costing more in the building trade, and what we make of it all.
RISING COST OF BUILDING MATERIALS
No matter the trade, it’s true that the cost of building materials has risen over the last few years in almost every area. We have seen an increase in sheet metal, soft lumber, copper, PVC pipe, and read-mix concrete, to name a few.
The National Association of Home Builders reports an increase across the board. “This adds up to an 4.9% increase in building materials prices since the start of 2022,” the NAHB reported in May 2022. “Building materials prices are up 19.2% year over year and have risen 35.6% since the start of the pandemic.”
In addition to the cost of materials, the cost of labor has also risen. Many companies are paying their employees more as an incentive to keep them employed. Everyone is feeling the sting of rising costs.
LUMBER COSTS ARE RISING: AN EXAMPLE
To show a specific example of the rising costs, let’s look at one specific material: lumber.
At the beginning of the pandemic, the cost of treated lumber, which is used in any outside projects, such as decks, was quite high.
After that, we saw a spike in plywood, which was caused by glue shortages. For a builder, the price of plywood makes a big difference in the overall budget of a project. A new construction home uses a lot of plywood–from the floors to the walls to the roof.
According to our own calculations as builders in Tennessee, we have seen some specific examples that show this overall increase.
The cost of ¾-inch subfloor has risen in the last few years:
That is a significant increase in cost and certainly makes a big difference in the overall budget for any building project.
Another example is OSB sheathing for walls and roof:
Although this is a small sample of what is driving housing prices to increase, and both of the 2022 numbers were calculated at a spike and are not the average, this example shows two significant increases in pricing that lead to overall affordability for a home or remodel.
IS IT THE RIGHT TIME TO BUILD?
When we talk to clients (or potential clients), we always discuss cost, and often the conversation goes to the rising costs of materials. Many people want to know if this is the right time to build.
While we wish we could see into the future, we cannot predict what will happen. There are many smart economists writing good articles about this subject, but we do have a few thoughts we would like to share.
Overall, it does look like prices are stabilizing, and perhaps the worst is over. However, if the pandemic has taught us anything, we know that we truly can’t know or predict the future. None of us knows what the future will hold. While it seems like the numbers are stabilizing, they could continue to increase.
This price tracker from the National Association of Home Builders shows an overall stabilization (sourced 8/26/22).
The other point we want to make seems very obvious, but we want to state it anyway: the prices are significantly higher than they used to be. Anecdotally, we have all felt a rising cost in different areas of life, but when it comes to building costs, they are clearly higher than they used to be.
THE RIGHT TEAM AT THE RIGHT TIME
So, should you build?
Should you do that remodel you have been thinking about for a while?
If you can wait to build, go for it. You may want to let things play out for another 6-12 months. But, if you need to get going on your project, go for it. There's absolutely no guarantee that prices will be significantly lower than they are now. In fact, the opposite could happen, and prices could continue to climb.
This is where choosing a good builder can help. If you find the right builder to guide your project, they can help you value-engineer your project to make sure you are avoiding the worst price spikes and sourcing materials at the best prices.
Are you interested in getting a quote for a new home or a remodel? Reach out to us by calling or texting (423.641.1182), sending an email firstname.lastname@example.org or submitting an inquiry on our website. We are happy to talk through your project with you.