Construction Costs On The Rise

Nestled in a wooded area in southeast Tyler is Highland Park Estates. The neighborhood is under development by Mark Mahaffey & Associates. One of their current projects is building a Mediterranean-style home that doesn't yet have a buyer.

Mahaffey and other builders say it's costing them more to build homes this year because of the rising costs of materials, labor, and fuel. Rising gas prices means it's more expensive to transport building materials.

"Probably more than 50 percent of the increase in construction has been just the cost of fuel," Mark Mahaffey, neighborhood developer, said.

According to the National Association of Home builders, plywood costs one-and-a-half times more this year than it did last year. And the price of nails is up 50 percent.

It has costs the builder five to seven percent more to build the new, custom home this year than it would have last year. And a portion of those costs is passed down to the home buyer. So if you were to purchase the home right now, it would cost you $1.2 million.

In this time of rising costs, builders are doing their part to limit homeowners' expenses.

"I think the builders in our area are very careful about watching their costs and becoming more efficient in how they provide the product in order to absorb some of that," Mahaffey said.

Now, if prices increase after the buyer signs the contract, the builder has to absorb all the extra costs.

Builders also attribute rising costs to basic economic factors: supply and demand. Factory shutdowns and other changes in the market have lowered supply, but demand for new homes continues to rise, bringing costs with it.

Julie Tam, reporting.