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Labor Costs Likely to Push Home Prices Higher
Thursday, October 10, 2019
New home prices have been rising since 2012 according to CoreLogic's chief economist Frank Nothaft. Prices in the spring of 2019 were up 2 percent compared to a year earlier, partially because of rising building costs. In an article in CoreLogic's Insights blog, Nothaft quotes National Association of Home Builder (NAHB) figures that say about 60 percent of a new home's sales price reflects the construction costs of the home. The major components of building costs are those associated with purchasing and preparing a lot, acquiring permits and inspections, hiring labor and buying materials. The last accounts for a large part of the overall structure cost and 2018 was a tough year for builders on that score. There was a significant price run-up in the two major components of framing, lumber and steel. Lumber prices jumped 20 percent and steel prices were up 14 percent in September 2018 compared to a year earlier.
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