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The rising costs of building materials continue to hamper the new-home industry. Prices are 20.4% higher than a year ago and have jumped 31.3% since January 2020, according to a report released by the Bureau of Labor Statistics. That is dampening builder confidence, which dipped in March for the third consecutive month, according to the latest reading from the National Association of Home Builders/Wells Fargo Housing Market Index.
Builders continue to report solid buyer traffic, but increasing development and construction costs are affecting their outlook. The March reading of the index showed the lowest future sales expectations since June 2020. Builders reported growing concerns that increasing construction costs and higher interest rates will price out more prospective home buyers from the market.
Prices for softwood lumber have soared 79.5% since last September. The “mill price” for framing lumber has more than tripled since last August, the NAHB reports on its blog, Eye on Housing. Other products like exterior and interior paint also continue to rise, jumping 30.3% and 21.2%, respectively, over the past year. However, in February, paint prices did hold relatively steady.
Another possible note of progress in building materials has been among steel mill products. Steel mill product prices fell 9.9% in February. That is the second consecutive decrease after increases each of the prior 15 months.