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This article first appeared in the February 2017 issue of Pro Builder.

As expected in a recovering residential construction market, the rising cost of labor and materials has pushed up the cost per square foot for builders, architects, and designers responding to Professional Builder’s House/Buyer survey. Whether survey participants cited labor shortages or very busy subcontractors raising bid prices, an overwhelming majority reported that their labor costs have increased. Concrete and framing were two trades frequently mentioned as having scarce labor availability, and lumber and drywall were materials often cited for acute price hikes.

In terms of overhead, more expensive insurance premiums and municipal fees were factors most often mentioned as contributors to the rising cost per square foot. Builders and architects also cited that energy code compliance, along with customers’ preference for home automation and more expensive finishes and other amenities, were also raising that figure.

More information about cost, house size, and buyer data is in the charts that follow.

Customers with annual income between $100,000 and $200,000 were the sweet spot for builders and architects who deliver custom, move-up production and luxury production homes. More than one-third reported that they are working with client budgets that are slightly bigger compared with the past three years.

Even though Baby Boomers between the ages of 52 and 65 are the leading buyer group for most builders and architects, less than a quarter of survey participants said the majority of their customers are buying with the idea that their home could be their last house, nor were they seeking designs to accommodate multigenerational living. Most clients also have specific purposes assigned for all the spaces in their home.