The residential housing market has experienced drastic changes over the course of 2022. With sky-high prices at the beginning of the year to decrease and a general stabilization towards the end of the year, custom home builders have seen it all.
Luckily, the last quarter of 2022 and outlooks for 2023 paint a more positive picture.
Residential Construction Materials Prices
Several factors affect the price of a home: the current market, interest rates, and the cost of building a home. One of the biggest contributing factors to the cost of building a home is the price of construction materials.
Throughout 2022, we’ve seen a steady decline and gradual stability in residential construction material prices. You’ll see that this trend has continued through Q4.
- Lumber: Lumber prices took a quick spike at the beginning of Q4, followed by a steady decline. Prices remained relatively unchanged from the start of the quarter to its end in December.
- Steel: Steel prices rose steadily over Q4, following the trend established in the third quarter of 2022.
- Paint: Paint prices rose slightly in Q3, about 0.7 percentage points from October 2022 to December 2022.
- Concrete: A concrete shortage continues to push the price of concrete upward. Many predict costs to continue rising into 2023.
- Glass: Glass prices remained relatively unchanged through Q4 of 2022.
- Gypsum: While gypsum prices increased sharply in Q3, the Q4 trend for 2022 saw the cost of gypsum remains steady.
- Plastics: Following the downward dip in plastic prices from Q3, costs continued to sharply decrease this quarter.
Thankfully, the high prices we saw at the beginning of the year have drastically reduced throughout 2022. While some costs continue to rise, they’re nowhere near as dramatic as they were at the beginning of the year.
It’s also crucial to note that one of the most significant costs of building a custom home is that of land. Depending on the lot you choose, its cost can vary greatly. If you’re looking for gorgeous plots of land that are nestled into the nature and beauty of central Arizona, Prescott offers several amazing custom home communities where you can build.
Residential Construction Labor Costs
Another key piece of homebuilding is the labor that goes into your project. As we saw in the third quarter of 2022, a severe shortage of construction workers was causing the cost of labor to increase.
Labor remained in short supply through the end of 2022. Costs continued to rise, but at a slower rate than they did during the first three quarters of the year.
Most experts agree that the United States is not currently in a recession. Still, many warn that one could be coming in 2023. But the GDP did rise more than expected in Q4 of 2022, so the future remains uncertain.
Regarding the residential home market, interest rates continued to rise. As a result, the cost of pre-built homes has decreased, but prices still haven’t returned to pre-pandemic rates. Fewer people bought homes, too.
When looking at the custom home market, fewer people also broke ground on new home-building projects. However, this decline wasn’t significant and could be attributed to home builders not wanting to start a new project during the winter and holiday season.
The residential construction market has seen its ups and downs throughout 2022. Thankfully, things are looking more optimistic for the year to come. If you’ve been considering building a custom home in Prescott, Arizona, take advantage of the new year and start your project today!
At RES Construction, we have over 30 years of experience helping people build the homes of their dreams in Prescott, Arizona. Call our Prescott office today (928-776-0301) to discuss your project, and check back here to get the latest numbers.