New Home Buyers: Act now before Cost of Construction Goes Up

The cost of building materials jumped 25 percent year-to-year, according to the National Association of Home Builders' NAHB/Wells Fargo Housing Market Index, and builders are increasingly concerned about how this will affect homebuyers in the new-construction market.

In 2016, builders ranked building material costs low on their list of concerns – but now it's one of their top five issues.

The increased cost of lumber is a chief catalyst.

"Negotiations on a new softwood lumber agreement between the United States and Canada ground to a halt at the end of 2016 and likely are stalled pending the results of an investigation into unfair import practices requested by the U.S. Lumber Coalition," NAHB reports.

Because of the lumber problem, homebuyers will likely face price hikes.

According to the NAHB/Wells Fargo Housing Market Index, builders cited the following as the 10 most significant problems they expect to face in 2017:

  1. Cost/availability of labor: 82%
  2. Cost/availability of developed lots: 67%
  3. Impact/hook-up/inspection or other fees: 61%
  4. Building material prices: 60%
  5. Federal environmental regulations and policies: 52%
  6. Local/state environmental regulations and policies: 52%
  7. Regulation of banking/financial institutions: 48%
  8. Development standards (parking, setbacks, etc.): 47%
  9. Inaccurate appraisals: 46%
  10. Health insurance: 40%