how is the cost of buiding materials affecting construction of new residential houses?

explain why changes occurred in supply, demand, and price for new residential housing construction in the united states?

10 Answers

Relevance
  • Anonymous
    1 decade ago
    Best Answer

    Although the cost of building materials has increased over time, the real cost is for the land the home sits on. The land is worth much more than the building materials.

    Source(s): Mortgage lender - 20 years personal experience.
  • well materials can affect prices for sure, but only if the homebuilders can pass that price on to the home buyers..in a bull RE market it is easy..and a bull RE market will casue material prices tot rise..especially a booming one..any way..when int rates rise and the buying frenzy subdues..the market softens..and the builders are late to realize his so they keep buying materials but now they can't pass on cost to buyers because buyers are seeing the market softening and don't want to buy house for 500,000 when they have a strong hunch thats no one else will either..then all the buyers whisper. ..hey I think I can buy this a lot cheaper if I wait a while...look at a stock chart notice how prices trend up then evntually will go down..RE will do this too...so then the price of materials won't matter because the builders and holders of inventory of homes will need cash flow to pay expenses so they will start selling at reduced prices or offer rebates or incentives....this is a great sign that they need to sell badly and if you wiat you will save...look at stock charts of LEN ,TOL, KBH and other builders..notice how much higher prices of these stocks were just last year..then look how much lower the stock price was in 2001....common sense tells me these stock prices going down more...so ...when they bottom home prices will soon follow...remember many of these companies way overbuilt and of course greed is involved and knowing CEO s another scandal is likely...so I think 20% lower prices for many areas of country before bottom is a layup....much worse for most ostentatious....don't be the last guy in this ponzi like game..would you buy those shoes today if you thought they would be on sale next week...??? think about it...

  • Well I would have to say fuel prices for one thing have caused the material to increase in price, along with wages for labor. The hurricane if Mississippi has caused the prices to increase over demand for building materials. Cost of shipping materials. Therefor the cost of housing is up.

  • 1 decade ago

    A big part of this is the economical explosion in China. They are having their own kind of "industrial revolution" over there at the moment. I know around here, copper scrap is going for around $3/lb. People are able to sell new copper they bought last year for a profit as scrap this year. Same with steel, aluminum, etc. Honestly not sure about residential so much, but commercial it is really putting a strain on.

  • How do you think about the answers? You can sign in to vote the answer.
  • truth
    Lv 4
    1 decade ago

    Well so far it was simple that since the FED interest rates were lower everyone was interested in buying houses with good prices... so there was no difference that middle class family or rich family buy $600K - $800K house easily. To stop that and keep difference in market fed started raising rate and that happened quick in short time that affected all the fields and housing was a top topic that everyone tried to make money in 1 night...

    Beside that steel, gold and all the prices went up quickly and that affected the market.

  • 1 decade ago

    The simple answer to that is 'supply and demand'. The more you need something, the more they will charge you for it. Remember the craze with the cabbage patch dolls? First they were selling for $4.95. Once the hype caught the fury, they went up to as much as $200.00. Supply and demand!

  • 1 decade ago

    changes occured in supply is why cost of most materials went up. depending on what material there are many reasons

  • ed
    Lv 7
    1 decade ago

    Demand for materials....Hurricanes. New construction.

    Reduction in supply........Forest fires. Exports. Slower growth compared to cutting.

    "Elementary", my dear Watson.

  • 4 years ago

    Architects are expensive and unless your building a mufti-million dolor house there's no need for one. You can buy the plans for most home styles and have the contractor modify them for you.

  • 1 decade ago

    All the Hurricanes more building going on ...Forest Fires burning up lumber.Fule prices hurting trucking...up up up all the way around. FEES...TaXES....

Still have questions? Get your answers by asking now.