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June 27, 2024

Custom Home Market Update – June 2024

Custom Home Market Update - June 2024

Inflation Slows But Costs Keep Rising

As we progress into Q2 2024, it’s essential to reflect on the custom home building market’s current state. While inflation has eased from the pandemic’s peak, construction costs continue to rise.

Recent government data reveals a 2.3% increase in residential construction input prices from April 2023 to April 2024. This rise is more manageable than the pandemic’s 15% quarterly surges but still outpaces general inflation.

Key building materials like softwood lumber experienced significant price hikes in early 2024, with a 6% increase in just the first month. Gypsum prices, on the other hand, have remained stable year-over-year.

The persistent rise in construction costs stems from high inflation and elevated interest rates. Despite the Federal Reserve’s rate hikes to curb inflation, construction prices remain on the upswing.

Key Points:

  • Residential construction input prices rose 2.3% from April 2023 to April 2024.
  • Softwood lumber prices surged by 6% in early 2024.
  • High inflation and interest rates drive persistent cost increases.
  • Building now locks in pricing before further cost hikes.
  • Renting offers poor long-term financial benefits compared to homeownership.

For Homebuyers, the Time to Build Is Now

Prospective homeowners considering a custom build should act now to lock in pricing before costs escalate further. Many clients who paused their plans in 2022 and 2023 have returned this year, only to find higher re-bids.

Here are key reasons to move forward with your custom home build:

  • Costs are likely to continue rising, possibly accelerating if inflation resurges.
  • Elevated interest rates make delaying less attractive.
  • Skyrocketing rental costs make building equity through homeownership more advantageous.

A recent Bank of America survey highlighted the challenges renters face:

  • 70% of renters view renting as a poor long-term investment.
  • 72% worry about the financial impact of rent hikes.
  • Nearly 90% of homeowners report greater emotional fulfillment compared to renters.

Take the First Step Today

Despite challenging market conditions, locking in construction pricing now makes sense. Rather than waiting for uncertain future relief, take control of your homebuilding journey.

Start with a conversation. Our team at RES Contracting is ready to discuss your custom home goals, provide realistic pricing estimates, and outline a plan to bring your dream home to life, even in today’s market.

We understand these times are tough for homebuyers, but there’s nothing more rewarding than moving into a home tailored to your lifestyle. When you’re ready to take that first step, we’re here to guide you through the process. Give us a call today at 928-776-0301.