Two builders in the same market, buying the same lumber package for the same house plan, are not paying the same price. The gap this year is five to one.
NAHB’s July 2026 HMI special survey, published August 24 by economist Paul Emrath, puts the median material-cost increase at 6.7% year over year. Broken out by builder size, builders who started five or fewer homes in 2025 reported a median 9.1% increase. Builders with 100 or more starts reported 1.8%.
The distribution, not just the median
72.9% of builders reported increases up to 15%. The modal response, at 28.4%, was the 5% to 9.99% band. Another 22.4% came in under 5%, and 22.1% landed between 10% and 14.99%.
The 6.7% median lines up with NAHB’s July producer price index reading for goods used in new residential construction. Strip out energy and that PPI figure drops to 5.0%, which says a meaningful share of the increase is fuel and transport rather than the commodity itself.
What scale actually buys
Volume discounts are the obvious answer and the least interesting one. The bigger levers are stockpiling ahead of announced increases, long-term supplier contracts that lock a price through a fiscal year, and the standing relationships that let a builder defer a price increase by a quarter without renegotiating anything.
All three require working capital and predictable volume. A builder doing four houses a year has neither, so every quote is spot pricing on a market that has moved against them.
Where it lands
This is a market-share mechanism dressed up as an inflation statistic. A 7.3-point cost spread on the same house, in a year when builders have been cutting prices for sixteen straight months, is the difference between a thin margin and no margin.
Small builders who want to close that gap have two options that don’t require scale: joining a purchasing cooperative, or locking a supplier agreement before the next increase is announced rather than after. Both are unglamorous. Both are cheaper than 7.3 points.
Basis is the other side of the same arithmetic. Spandrel bought Charlotte’s 400 South Tryon tower at foreclosure for $36 million against a $115.3 million tax value, and that discount is what absorbs conversion costs a market-rate buyer could not carry.