Despite a tough eighteen months for the construction industry, residential construction proceeds at a break-neck pace. But increased costs and uncertain build schedules increase the difficulty of home construction. Construction spending sits 8.2% higher than one year ago.
The costs come from labor and supply shortages rather than a lack of homes hitting the market.
What you need to know about new residential construction:
First, it’s going to hit you in the bank account. Buyers can expect larger mortgages, regardless of credit, to accommodate higher building costs. Some estimate that an average house costs $36,000 more in build materials alone than at this same time pre-pandemic.
Second, delays occur. Even during normal circumstances, late supply shipments postpone construction. But currently, many contractors can’t find the required building materials. Burglaries for build materials even plague job sites, including windows stolen from their frames in the middle of the night.
Third, new homeowners should save repair nest eggs. A one-year builders warranty covers most new residential construction. However, the labor and supply shortage leads to a contractor shortage. In addition, should your roof leak one year after purchase, repair costs may be excessive. These factors translate into homeowners waiting longer for repairs.
Plenty of reasons drive prospective homeowners to buy new. But home shoppers should be aware of potential pitfalls that the booming market presents.