Key facts
- Median building material costs for new homes rose 6.7% year-over-year.
- Smaller builders (<= 5 starts) faced a 9.1% median cost increase.
- Larger builders (>= 100 starts) faced a 1.8% median cost increase.
- 72.9% of builders reported material cost increases of up to 15%.
Median costs for building materials climbed 6.7% over the past year, according to new survey data from the National Association of Home Builders (NAHB) and Wells Fargo. The increase closely mirrors the 6.7% rise in producer prices for residential construction inputs.
The survey revealed a significant disparity based on builder size. Smaller builders, those with five or fewer housing starts, experienced a median material cost increase of 9.1%. In contrast, large production builders with 100 or more starts reported a much lower median increase of 1.8%.
NAHB attributed this difference to larger builders' advantages in stockpiling materials, negotiating long-term supply contracts, and leveraging preferred supplier relationships. These factors help them defer or soften price increases.
Beyond material costs, builders are also contending with high mortgage rates, skilled labor shortages that drive up wages, and various regulatory costs, all of which contribute to broader housing affordability challenges.
The findings highlight a structural cost advantage for larger builders, potentially narrowing margins for smaller firms and impacting their ability to compete.