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Construction costs increasing, Billings housing market stable

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Posted at 1:56 AM, Jul 04, 2024

The price of lumber is part of the reason the cost of houses has increased.

And along with that comes the effects on the Billings Real estate market.

“If I had my way, I'd help everybody out,” said Scot Bonenberger, BRS Construction owner. “I love building houses. I love building for people.”

Bonenberger is two months away from finishing a 6,500-square-foot home in the Timbers on Alkali Creek subdivision and says lumber prices continue to remain high.

Despite the surface numbers, lumber prices are actually higher than four years ago.

According to the National Association of Home Builders, prices have decreased 75 percent since May of 2021 and about 16 percent since last year at this time.

However, other materials and expenses add to the costs of home construction.

“The reality is we have a labor shortage,” Bonenberger said. “We have a skilled labor shortage and because of that skilled labor shortage, you know, the cost of labor has increased.”

“As the cost of new construction goes up, then it limits the supply of new homes that are coming on the market,” said Jason Lillie, a Real Estate agent for Keller Williams Yellowstone Properties in Billings.

Lillie says it's a seller's market and there are not enough homes to meet demand right now.

There's less than a two-month supply for homes costing from 200,000 to $400,000 which Lillie says has been the norm for that price range over the last 20 years.

But building a home would start at $350,000.

“A lot of builders, the challenge that they're facing right now, in 2024 there's been 162 new construction homes that have gone through our MLS systems and the average sales price of those homes is $475,000,” Lillie said.

Despite the economic challenges, they both say it's a healthy housing market.

“This is a great industry,” Bonenberger said. “There will always be a need to build new homes.”

“We're getting back to the more stable market that we're used to,” Lillie said.