Material costs rose 6.7% over the past year, according to the July NAHB/Wells Fargo Housing Market Index survey. But the headline number hides a much larger divide.
Builders completing five or fewer homes reported a median cost increase of 9.1%. Builders with 100 or more starts reported an increase of just 1.8%.
That means the smallest builders experienced material inflation at roughly five times the rate of their largest competitors.
NAHB offers several possible explanations. Larger builders can stockpile materials, negotiate long-term supplier contracts, and use their purchasing volume to delay or reduce price increases. Smaller builders typically have less leverage—and less capital available to buy materials before they are needed.
The signal is not simply that materials are becoming more expensive. It is that scale increasingly determines who can absorb, avoid, or negotiate around those increases.
For smaller builders, cost control is even more important. Locking in prices, securing critical materials early, and maintaining enough capital capacity to act when opportunities arise can help protect already-thin margins.
Smaller builders may not be able to match the purchasing power of national companies. But they can respond with tighter planning, faster decisions, and greater discipline before committing to a project.
Read full article: Cost of Materials Rises, Especially for Smaller Builders
