Why is the cost of new construction so high?

The pandemic has affected new construction as much as any industry with supply chain delays and significant cost increases. As you may have read, the cost of framing lumber more than tripled in the last year and added roughly $36,000 to the cost of a new home. Fortunately, costs have started to come back down and August, 2021 was the second consecutive month that saw these price increases either slow or decline.

The price drops are significant but construction materials are still 14 percent pricier than they were at the end of 2020. Steel mill product prices rose 5 percent from July to August and are more than double last year’s levels. Ready mix concrete prices were up just under 2 percent from the previous month. Drywall prices remained stable over the month after having skyrocketed over the past year.

Softwood lumber, the biggest challenge for builders and consumers and which has been on a roller coaster ride all year, is driving the overall dip. Prices topped out in May, 2021 and have fallen consistently since, but is still 24 percent higher than pre-pandemic levels in February, 2020.

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