By Custom Homes by Modern Structure: Evansville, Indiana

Since 2020, the cost of building a new home has climbed at an unprecedented pace, reshaping expectations for homeowners and home builders.

Before 2020, budgeting for materials, labor, and timelines was a relatively predictable process. Today, this same process has become more complicated and complex due to global supply chain disruptions, labor shortages, and fluctuating material prices. 

From the price of lumber spiking during the early pandemic to ongoing increases in concrete, steel, and skilled labor, nearly every component of residential construction has been affected. 

As demand for housing remains strong, these rising costs continue to influence not only how homes are built, but also what buyers can afford and how projects are planned.

In this blog, we’re walking you through these price increases to help you get into the best and most educated mindset before starting the process of building a new home. By having a good understanding of how homes are priced in today’s market, you can make more informed decisions. 

What Happened to the Homebuilding Industry in 2020?

In 2020, the homebuilding industry was hit with a perfect storm of disruption and unexpected demand. Early in the year, the COVID-19 pandemic caused widespread shutdowns, halting construction projects, slowing manufacturing, and creating major supply chain issues. 

Builders faced major delays in getting materials like lumber, appliances, and fixtures.  At the same time, interest rates were at a historical low, and there was a shift in how people wanted to live. In 2020, people started wanting more space and home offices, which sparked a surge in the demand for new homes. 

This sudden increase in demand, combined with limited supply and labor shortages, drove up both material costs and home prices, setting the stage for the higher building costs we’re still seeing today.

Why Is Lumber (and Everything Else) So Expensive?

According to the National Association of Homebuilders (NAHB), the average construction cost of a typical single-family home in 2024 was  $428,21, or about $162 per square foot. This is the highest number we’ve seen since the NAHB started doing construction cost surveys. For reference, the cost of construction per square foot was $80 in 2011, $95 in 2013, $103 in 2015, $86 in 2017, $114 in 2019, and $153 in 2022.

At the start of the pandemic in 2020, many lumber mills actually shut down because they expected the demand for lumber to decrease. In reality, the exact opposite happened, and the demand for lumber skyrocketed due to low interest rates, and families needing more space.

While lumber mills struggled to keep up, the price of lumber continued to rise. According to the NAHB, the spike added over $24,000 to the price of an average new single-family home built in 2020. 

And it’s not just lumber that was affected. Materials across the board including concrete, steel, insulation, windows, and even garage doors have all seen increases. During the Pandemic, for example, electrical supply houses could only guarantee a price for 24 hours!

A lot of that comes down to supply chain issues, higher transportation costs, and demand around the world. When it costs more to produce, ship, and source these materials, those price increases get passed to the homeowner.

Because of all this, things that used to feel like small line items in a budget now carry a lot more weight, and the total cost of building a home adds up faster than you may expect. 

The Supply Chain Struggle Is Real

Since 2020, the supply chain hasn’t quite recovered. In fact, we are still dealing with building material delays, backorders, and out of stock notices. Every time a builder faces a supply issue, the design and building process itself gets backed up, too. 

If you’ve heard stories about construction projects taking months longer than expected, the supply chain is usually the reason why. Since 2020, getting building materials hasn’t been as simple as placing an order and waiting a few days for delivery. Many products including windows, doors,  appliances, and light fixtures have faced backorders, limited availability, or long lead times.

A big part of the issue comes from the fact that some factories slowed down, shipping became more expensive and less reliable, and certain materials got stuck in transit longer than usual. 

Even when products are available, they’re not always arriving on schedule, which can bring construction progress to a halt. And if your builder can’t get an important material, such as shingles or lumber, the rest of the project has to wait. 

Cost-wise, these delays can increase labor costs and some supplies may need to be substituted for more expensive ones. In today’s building environment, patience and flexibility have become just as important as the budget itself.

Keep in mind that every other product or service you purchase on a daily basis has increased in price. This includes gas, groceries, consumer products, food, energy, insurance, and medical expenses. The increases aren’t unique to the building industry. 

What Does the Labor Shortage Have to Do With The Price of a New Home?

The U.S. homebuilding industry has been dealing with a labor shortage for years, but it became a lot more noticeable after 2020.

During the pandemic, some workers left the industry altogether; for health reasons, early retirement, or to switch careers out of fear of losing their jobs.

At the same time, fewer younger workers have been entering the skilled trades like framing, electrical, and plumbing. As a result, there are fewer experienced laborers available, and the ones who are working are in high demand.

When demand for laborers goes up and supply goes down, prices follow. Since 2020, homebuilders often pay more to secure skilled labor, and those higher wages get built into the overall cost of a home.This can also mean longer timelines, since crews are juggling multiple projects at once and can’t always start as quickly as planned.

For homeowners, this shows up in a couple of ways: higher quotes, longer build times, and sometimes the need to be flexible with scheduling. As an Evansville, Indiana custom homebuilder, it’s not that we don’t want to move faster, we are sometimes limited by the amount of workers available at the time. 

How Much More Does It Cost to Build a House Now?

Overall, the cost of building a new home today is roughly 35% higher than before the 2020 pandemic. 

However, to answer the question of “how much is it to build a new house”, we’d need to meet with you in person to get more detail of what you’re looking for. The total cost of building a custom home can vary greatly. 

Your cost depends on factors like: where you build, the building materials that are used, your floor plan, and the finishes you select. If you have questions about what you can afford, call us to schedule a free building consultation!  

How Does Custom Homes by Modern Structure Handle These Increases?

Although all of this talk about price increases may sound scary, we’re here to assure you that building a new home is still within reach and is still a very solid investment. 

We have decades of experience in the homebuilding industry, and that comes with a lot of knowledge about how to stretch a budget without sacrificing quality or beauty.

These are just a few of the ways we help our customers get the most bang for their buck, while still getting into a home that perfectly suits their lifestyle.

• We offer innovative design ideas to minimize additional construction materials and labor
• We encourage customers to build up instead of out and down
• We design layouts that are more efficient, meaning they use shared plumbing walls, and we try to minimize hallways and doorways
• We also specialize in designing spaces to be multifunctional to reduce square footage needs and cost
• We help our customers design a house that can be easily expanded in the future as needs change for additional space
• We help our customers define their needs versus their wants – in the end focusing on your needs gets you a lot more from your budget 

Building a Custom Home is Still a Great Investment

Things aren’t quite as chaotic as they were the past few years, and that’s good news! Some material prices have started to stabilize, supply chains are slowly improving, and builders like us have adapted to many of the challenges that once caused major delays.

For potential homeowners, we assure you: a more predictable market makes it easier to plan, budget, and move forward with confidence. Building a home may still come with a higher price tag, but with the right expectations in place, it’s absolutely still achievable.

If you’re in the market to build a custom home, the best place to start is by talking to an experienced homebuilder. Custom Homes by Modern Structure is an Evansville, Indiana area home builder. We specialize in custom homes that are multifunctional, unique, energy efficient, and suited to your lifestyle. 

To get started, give us a call at 812-306-8438 or fill out this form on our website. We can’t wait to get to know you!