While the share of homebuyers looking for a new home versus an existing home declined to a pre-pandemic level of 19%, there is still enough pressure in the residential construction market to keep prices moving higher. New home starts are up and total spending on residential construction increased by 1.1% (NAHB).
While we think the present is always a great time to build your custom home in Prescott, it’s always a good idea to have an idea of what’s going on in the construction materials market. Here are the latest numbers, for Q1 2022.
Residential Construction Materials Prices
For the most part, pricing of construction materials had significant price increases as of the first quarter of 2022 (over 2021). That said, we expect that trend to continue in just about every category. There continues to be demand for new construction residential homes, and that trend appears to hold true for Prescott, Arizona as well.
- Lumber: The first quarter of 2022 brought the same upward trend in framing lumber pricing. However, pricing started coming down at the end of the quarter and even into April, which brings some optimism for lumber pricing going forward. (source source)
- Steel: We are still seeing a significant backlog in steel inventory. Pricing on raw material continues to climb. (source)
- Paint: Paint also saw a 20-30% price increase at the end of March 2022 over March 2021. (source: BLS PPI Report)
- Concrete: The construction industry is likely to see a rebound going forward, boosted by the residential segment. That is likely to continue to push concrete and cement prices slightly higher (2022 over 2022 Q1 is up 3% and likely to experience a 7% increase going forward). (source source).
- Glass: Flat glass pricing rose by nearly 10% in Q1 2022 over Q1 2021. BLS PPI
- Gypsum: Drywall rose 5.1% over 2021 and is expected to increase over 6% this year. (source)
- Plastics: Construction plastic rose considerably, by 35%. (source)
Land is also a significant factor in the cost of building a new custom home in Prescott. The prices in the area can vary based on location and the ease to build on that particular piece of property. Prescott has plenty of plots available in several categories and price levels.
Residential Construction Labor Costs
There is not much new data for Q1 2022, but we are continuing to see a shortage of skilled construction labor. This affects all phases of the residential building process in terms of cost (increases) and time to complete projects.
Prices depend on the old supply and demand curve, and that continues to push up pricing. Inventory of construction materials is backlogged while demand continues to pressure the market. While the logistics crisis appears to be easing up, there is still enough inventory waiting for delivery to put economic pressure on the market. That means we continue to see inflation.
That said, we continue to see an increase in new residential construction.
It appears as though the residential construction market is beginning to level off, but we still expect pricing to continue to increase. Even with rising prices, if you’re ready to build your dream custom home or a second or third home, doing so right now in Prescott can still be a great decision for your family.
Call our office today (928-776-0301) to discuss your project and check back here to get the latest numbers.