New Construction Homes Update: What You Need to Know

Hey guys, what's up? It’s TJ with Sanctified Homes and Construction, and today I want to dive into what’s happening in the world of new construction homes as we head into the third quarter of 2024. There are a lot of factors to consider when planning a new build, and I’ll cover some of the top trends and updates you should be aware of, including interest rates, material costs, and whether now is the right time to start your construction project.

1. Interest Rates: What’s the Forecast?

One of the biggest factors affecting home affordability right now is the interest rate on home loans. The good news is that interest rates are trending downward, at least based on what the Federal Reserve and experts are predicting. Lower interest rates mean more affordable monthly mortgage payments, which is great for those looking to build their dream home.

However, it’s important to remember that these predictions can shift. While it looks promising, there’s no guarantee that interest rates will continue to fall indefinitely. So, if you’re planning a build, now might be a good time to lock in a lower rate, especially if the time feels right for you.

2. Material Costs: Lumber, Siding, and Beyond

Lumber prices are one of the most closely watched commodities in home construction, and right now, the trend is pointing downward. Over the next 12 months, lumber is projected to become more affordable, which is good news for anyone planning a new home. However, because lumber is a commodity, the prices fluctuate—it’s never a straight line up or down. Like farmers experience ups and downs with crops, lumber prices rise and fall unpredictably.

While the prospect of lower lumber prices is promising, other materials should be considered. Shingles, vinyl siding, and concrete are seeing regular price increases. We’ve already seen bumps in the cost of asphalt products, and it wouldn’t be surprising to see concrete prices climb again in the spring of 2024. Unfortunately, while lumber may drop in price, other materials tend to stay high once they’ve gone up. Products involving resins and asphalt don’t see the same fluctuations as lumber; once their price increases, it rarely drops back down.

When people talk about lumber prices dropping, keep in mind that the lumber package—the wood framing and other wooden materials in your house—typically only accounts for about 20% of the total construction cost. Even if lumber prices dip, it’s the overall materials and peripherals (like windows, doors, and siding) that can significantly impact your budget. Other material costs, especially items with resin or asphalt, are likely to stay elevated. So, while lower lumber costs help, they don’t tell the whole story.

3. Shifting Market Trends: Solar and Energy Efficiency

As energy costs rise and the world becomes more focused on sustainability, we’re seeing more new construction homes adopting solar energy systems. Solar panels are increasingly popular, especially as homeowners look for ways to cut long-term energy costs and reduce their carbon footprint. That said, it’s important to do your homework—solar may not be the right fit for everyone, depending on your location and energy needs.

We’re also seeing more builders recommend energy-efficient HVAC systems and heat pump water heaters. These can help you save money in the long run, but they also come with upfront costs that you’ll need to consider when planning your build. However, many areas offer rebates or tax credits for energy-efficient appliances, making them a smart long-term investment.

4. Timing: When Should You Build?

With all these factors at play, the big question is: When should you start building? While it’s tempting to wait for the perfect moment—whether it’s for lower interest rates or more affordable material costs—the reality is, there’s never a "perfect" time. I always recommend building when it’s right for you. If the time feels right, go for it. If you’re not ready, don’t force it just because the market looks favorable at the moment.

The longer you wait, the more likely you’ll be impacted by rising prices on other materials like shingles and concrete. And while interest rates and lumber prices may fluctuate, other costs tend to only go up. If you’re looking to build a custom home, remember that it takes time to design and plan. Even if you start the conversation now, it might be months before the actual construction begins.

Conclusion

In summary, the new construction landscape for 2024 presents a mixed bag. While interest rates are trending downward and lumber prices might ease up, other materials like siding, shingles, and concrete are likely to stay elevated. If you’re considering building a new home, it’s essential to factor in all these elements, not just the headlines about lumber or interest rates.

At the end of the day, build when the time is right for you, but be aware of the market trends. If you’re ready to start or have more questions, feel free to reach out. We’re always here to help guide you through the process and ensure you’re informed every step of the way.

As always, don’t forget to raise your standard. We'll talk to you soon!