Construction Pricing Update January 2023
We always seek to provide transparency and to educate potential and existing clients about the best building practices. We know that cost is top of mind when it comes to building a home, so we are now providing a quarterly cost per square foot report in our newsletter to help homeowners understand current costs and the reasons behind them.
Read our in-depth article explaining construction pricing here.
The long and short of current housing prices
Square footage pricing has remained unchanged since last quarter, in spite of significant decreases in key building elements. Living Stone’s Operations Manager Toby Jernigan explains.
“Commodity-driven materials, such as lumber, concrete, and some petroleum-based products, have dropped in recent months, with lumber experiencing one of the steepest declines over the past few months,” he says. Lumber prices are currently down 62 percent from April of 2022 rate, and 25 percent from rates February of 2023, according to Market Insider.
Lead times for products have also decreased. “In the height of Covid, they ran from 26 to 32 weeks. Now, over the past three to four months, we’ve seen them go down to a more reasonable time frame of 12 to 16 weeks.”
Unfortunately, these decreases don’t tip the scales in terms of overall housing prices. “Commodity material prices are only a small part of the overall cost of building a home.” Toby explains. “Overall home pricing still remains inflated, reminiscent of the past few years. This seems to be mostly due to increasing labor cost, as many older tradesmen are retiring and newer, younger tradesmen are expecting/requiring a higher hourly pay.
While the cost of some materials has gone down, others have gone up. “There has been a steady increase in price for other items, such as appliances, drywall, paint, and metal. Add that to an overall inflation rate of 6.0 as of March 2023, and any decreases in overall costs are quickly offset.
“I would be surprised if there were any changes to any pricing until sometime in the summer, potentially, “ says Toby. “Summer is typically when lumber starts to spike, due to wildfires out West, hurricanes in the South, and other weather-related issues. Unfortunately, I think the labor increases are here to stay, and we will never see them go back to pre-Covid prices.”