Copyright © 2024 Rivendale Homes
Building a custom luxury home is a dream for many, but with rapidly changing market dynamics, understanding the financial landscape is crucial. In our previous article, "Understanding the Cost of Building a Custom Luxury Home in Austin," we delved into the current expenses associated with this endeavor.
Now, as we look ahead to 2025, it's essential to explore what the future holds for construction costs in the Austin market. Will luxury living become more accessible, or will it continue to be a realm for the elite? Let’s uncover the trends and expectations shaping the cost of luxury home construction in the years to come.
The construction cost for a new home is greatly affected by commodity pricing, namely lumber, cement, aluminum, copper, steel and dry wall. Any time you look at commodity pricing you realize their prices are based on the available supply and the effective demand. For these commodities, demand for 2025 is expected to increase slightly from 2024 while supply of these commodities stays in line with what the markets experienced in 2024.
Over the last 4 years prices of these commodities have been quite volatile. Lumber has risen from $278 per thousand board feet to $1,500 back down to its current $504 per thousand board feet. Concrete has continued its steady increase rising from $235 per yard in the middle of 2023 to $250 per yard at the end of 2024. The sheet rock index has increased from 243.2 in January 2020 to 366.7, in December of 2024 an increase of 50.8%. Fabricated structural metal has risen from an index of 120.2 in January 2020 to 174.69 in December of 2024 an increase of 45.3% over the last 4 years (all commodity figures are from the St. Louis Federal Reserve Bank).
Given the large increase in construction costs over the last 4 years our outlook for 2025 is for the pace of construction cost increase to moderate, with an average increase in the range of 5% - 7% being the most likely over the next 12 months.
Rivendale Homes has worked very hard over the last 24 months to lower the cost of constructing a new custom home (see article titled Rivendale Homes is driving down the cost to build a new home in Austin). We have been able to reduce the cost of building a luxury home by 15% to offset some of the increase mentioned above. Our prices for luxury home construction are some of the lowest in the Austin market without sacrificing the quality we build into our home. Stop by and check out one of our model homes that are open every weekend to see for yourself.
