The cost of building a single-family home has risen back to levels last seen in 2007. This is according to a new report from the National Association of Home Builders. Construction of a single-family home averaged $302,435 in 2021, up from $212,591 in 2011. That’s despite the average size of a new home decreasing to 2,711 square feet this year from 2,839 square feet in 2011. The spike in costs is another blow to an already shaky housing market that has been buffeted by supply constraints and rising mortgage rates over the past year. It also threatens to slow new construction when demand is strong and there is already a shortage of new homes on the market.
“The problem with this rapid increase in prices is it could create affordability issues,” said Robert Dietz, chief economist at the NAHB, which has warned that lumber shortages are driving up costs for builders. “It could lead to fewer homes being built.”
Why are building costs rising?
A major factor in the rising cost of construction is the increased cost of materials. This grew by 4.9 percent from August 2020 to August 2021. Of particular concern was the rise in lumber prices. Lumber more than doubled but has since begun to return to historically average levels. The price spike was due in part to increased demand from people investing in home improvement projects during the pandemic and in part to increased demand from foreign markets as well as forest fires that depleted inventories.
For consumers, the rising cost of building materials means more expensive home renovations and remodeling projects as well as higher home prices. The lack of available land is also contributing to higher home prices; this shortage is likely to persist as builders struggle to find affordable lots on which they can construct homes that will sell at a price point that most buyers can afford.
What is the Most Expensive Cost of Building?
When you are building your new home, there are many custom home costs that you should be aware of. However, the most important thing to remember is that these costs vary depending on your needs and preferences. That being said, generally, one of the most expensive custom home costs is interior finishing.
Interior Finishing is one of those custom home costs with plenty of variables. They tend to be a very expensive part of building your new home and can actually be the most expensive step in building a house. It includes things like flooring, tile, paint and other aesthetic extras that make a home truly unique. While some of these items may seem small or minor on their own, they can add up quickly.
Is Finishing a Basement the Cheapest Building Cost?
Yes, finishing a basement is the cheapest building cost.
When a homeowner wants to add more living space, they have two choices: finish their basement or build an addition. The latter is usually much more expensive and time-consuming, so we’ll focus on the former.
In contrast, finishing a basement is the only way to add any living space to your home for less than $100/sqft. And that doesn’t include the value of the additional bedroom or family room that you get out of it in terms of increased resale value. So if you’re thinking about starting a home improvement project, start with finishing your basement!
Remodel or Build? Contact a General Contractor in Utah County
When you’re deciding whether you want to remodel the entire house, it may be more expensive than just building one from scratch. But if you just want to add an extra room, a garage or finish a basement, then remodeling may be cheaper. It all depends on the scale of your project and how much time you are willing to put into it. Cost is definitely something that can tip the decision in favor of your choice. This is why it is best to work with a general contractor such as Allied Remodeling Contractors in Lehi, Utah. We can help you make an educated decision on whether remodeling or building is right for you and your pockets. Give us a call today at (385) 412-8088.