cost to build and demand continue to increase

We continue to see increases in the cost of goods needed to construct homes. An example is gypsum drywall prices. As reported in the November issue of the NAHB publication “Builder” magazine drywall “prices currently are at 92.6 percent of their peak housing boom levels, and announcements from at least three manufacturers indicate price hikes for 2014”. The increase is 20 percent starting with shipments on January 1 2014. The article also notes “the trend of annual price increases has been going on for at least the past two years”. You can read industry specific articles on-line at

We see similar price increases in other materials such as insulation and lumber. Lumber in particular has had a dramatic increase in the past year, almost doubling in cost and far exceeding the costs of the boom years.

In the same publication there is an article on Energy Star’s proposed tougher energy-saving standards for windows that will add significant cost to the cost of Energy Star ratted windows. The cost increase to comply is significant enough that “Lowe’s said it would likely cut its Energy Star offerings if the EPA enforces the new standard”.

Labor to date has not seen such dramatic increases, and this has helped keep the cost of building a home down. But labor costs have increased are approaching levels not seen for several years. With continued demand, and increased costs to do business, labor cost will continue to rise and add to the net cost to build a home.

Building lot prices have been increasing as well and are getting harder to find.

As in any industry the costs to produce a product is eventually passed on the consumer. The home building industry is no different. If you are contemplating buying a new home, or having a custom home built the present time to do this continues to be now as all indicators show that the demand, as well as the costs to build will continue to increase.