Why The Cost of Homes Are Rising


As mortgage rates remain at record lows, home prices continue to rise nationwide. In 2020, homebuilders experienced $20k-$30k year-to-date increases in home prices all over the country. With new communities popping up faster than ever before, we anticipate the value of a Maronda Home to increase even higher throughout 2021. Read more on why waiting to build your dream home is costing you.

It’s apparent that home prices are rising, but why exactly are they?

1. Low mortgage rates are attracting buyers.

Favorable mortgage rates have made homeownership more affordable, therefore bringing fresh buyers to the market. Lower household spending during the lockdown and federal stimulus checks have helped homebuyers accumulate down payments quickly. Some buyers have also decided to move away from the city or invest in a bigger home.  The transition to remote or Work From Home careers has many home shoppers looking to accommodate their families’ work and school needs in a new post-pandemic workforce. Overall, record-low mortgage rates are increasing house market demand and, in return, putting a considerable strain on building material supply in the U.S.

2. Building materials are becoming expensive and scarce.

As the prices for raw materials used to build homes rise, so do new construction homes’ costs.

  • Lumber, of the highest costs in homebuilding, has never been more expensive. Rising lumber prices alone have added $24,000 to the cost of building the average single-family home. See how Maronda has been coping with the challenge.
  • Crude oil, a typical starting point for paint, drain pipes, roof shingles, and flooring, has shot up more than 80% since October.
  • Copper, used for water pipes in many homes, costs approximately a third more than it did in fall 2020.
  • Drywall and ceramic tiles have climbed and are now just shy of their record prices.
  • The U.S. Bureau of Labor Statistic’s producer-price index reveals record prices for granite, insulation, concrete blocks, and common brick for 2021.
  • Shortages of cabinets, appliances, and vinyl to extrude windows have all posed problems for builders this year,

3. There are little to no inventory/homes available.

The housing market is highly competitive right now; interest rates are at record lows, and houses fly off the market. Currently, many areas nationwide are seller’s markets, meaning active buyers outnumber the homes available. 

Many homebuyers turn to new construction to avoid competitive bidding wars and pay way over the asking price. As a result, U.S. Housing Starts, or the number of new residential construction projects, are the highest they’ve been since 2006. As new construction companies continue to dominate the housing market, more and more building supplies will be used to keep up with sales demand.

You can learn more about our construction process here.

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