The State of Custom Home Building in 2024

“How much does it cost to build a custom home?”

More than any other question I’ve gotten as a home builder for the past few decades, that has always been what people ask me more than anything else. So much so, I’ve written on the cost of building multiple times, and I have to keep updating my answers over the years as costs rise.

These days, with prices constantly fluctuating, I still hear the same thing, but it has taken on a new meaning, with people saying (or implying): “How much does it cost to build a custom home NOW?”

In general, it’s difficult to find consensus on just about anything these days, with a few exceptions; most folks would agree these are some wacky and unprecedented times.

While this is not our first go around with runaway inflation, it is our first time with runaway inflation immediately preceded by a global pandemic, surrounded by massive supply chain issues, volatile interest rates, and major labor shortages in many key market sectors.

My intent in writing these blog posts is never political but rather to identify economic elements that we can all agree on and look briefly at how those elements are affecting the custom home market.We’ll leave the discussion about the reasons for those elements to another time and place.

Having said all of that, what is the state of the custom home building market along the Front Range of Colorado in 2024?

The short answer – STEADY. Here’s the longer answer for why I believe this to be the case:

#1: Interest rates are more stable.

Interest rates are relatively stable. Coming off a season of high volatility, folks who were looking to build but wanted to see a bit of predictability now have it, and many of them are making their move. Rates might move up or down a bit moving forward, but the large movements that we’ve seen over the last year or so would appear to now be in the rear-view mirror.

#2: Home prices are also more stable.

While demand is not what it was, supply is also not what it was – almost 80% of U.S. mortgages have an interest rate of less than 5%, 60% have a rate of less than 4%, and almost 25% of U.S. mortgages have a rate of less than 3%.

That, of course, is keeping supply low, which, when balanced with moderate demand, is making for a real estate market that is, at least by most estimates, relatively balanced between buyers and sellers, although volume is certainly down.

#3: The supply chain and building material costs have stabilized.

While things are not as wonderful as they were pre-COVID, in general, material costs and supply chains have moved away from the massive instability we experienced from 2020 – 2022. Certainly, there are still inflationary pressures, and we’re seeing 5% – 10% increases in our overall costs year to year; this is more or less in line with the overall economy.

So where does that all that leave us? What does it cost to build a custom home in Colorado in 2024?

As of the writing of this article, we’re telling folks that on average, we’re able to build a custom home at around $275/SF, exclusive of land and land improvements.

This of course is a broad brush stroke based on many variables that space and time constraints prevent me from diving into at this time, but overall is a good jumping off point for a more detailed conversation with prospective clients.

I’d be happy to discuss the particulars of your project, even if it’s just currently a dream or a sketch on a napkin. Don’t hesitate to reach out. If you want to see what we’re up to right now, some of our current projects include a Woodland Park home in the framing stage, and a scrape and build project in Colorado springs.