A recent survey of home builders found that on average, building material costs have increased 26.1% during the past year. The National Association of Home Builders’ NAHB/Wells Fargo Housing Market Index results found 28% of builders say prices have increased between 20% and 29.99%, though 37% reported material price increases above 30% during the past 12 months. NAHB’s Housing Market Index also found the highest share of builders are reporting severe material shortages, such as appliances, framing lumber, windows, and doors.
On average, the 12-month increase in material costs for the same house was 26.1 percent. Historically, NAHB has included the material cost question on its HMI questionnaire six times since 2012. The 2021 figure of 26.1 percent is the highest the average 12-month cost increase has been over that span—by a wide margin. The previous record was 6.1 percent recorded in 2017.
Material availability and costs are one of several factors, including the cost of regulation and a general shortage of construction labor, limiting the supply of housing, particularly for the entry-level market where additional inventory is badly needed.