Homebuilders See Material Costs Jump 6.7% in a Year, Squeezing Profit Margins

The cost of key materials used for building homes has increased by 6.7% over the previous year, according to a new survey.Homebuilders who responded to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) survey for July 2026 reported steep increases in material costs, with smaller builders absorbing the biggest hit.In the survey, 28.4% said that materials increased by 5% to 9.99%, while 22.4% reported less than 5% change, and 22.1% indicated a 10% to 14.99% increase. Overall 72.9% of builders reported that their cost of materials increased by up to 15% over the past year.Trent Klatte, CEO and co-founder of Los Angeles-based real estate and construction firm West End Construction, tells Realtor.com® he has seen changes to a number of expenses since 2020.Everything from imported materials to gas, fuel, and oil have been hit with major inflation. Los Angeles has the added strain of rebuilding from wildfires, which has driven up prices due to demand for materials and labor. Despite these cost increases, Klatte says he’s maintaining his business’ security—that security just means he passes on some projects.“Our margins haven’t necessarily been impacted, but ...