New Home Construction – Is there a right time of year to build?

New Home Construction – Is there a right time of year to build?

Each quarter, The Hawaii Department of Business, Economic Development & Tourism gathers data on construction in Hawaii..

The 2018 data tables can be downloaded here. As a home or property owner looking into building a new home, one question you may not have consider is how the time of year can affect the cost of the project. The question is, does a new home cost less if it is begun between January and June vs July through December?

After analyzing the current data tables, a pattern emerged. First and second quarter construction costs are lower than third and fourth quarter. Since 1982, home construction costs have been close to 2% lower January through June, than yearly average.

Two percent may sound small, but on a $500,000 house that could be a $10k savings!

One likely explanation for the cost difference is a seasonally affected competitive market. Studying the quarterly employment number for the construction industry in Hawaii, as found here, shows a strong correlation. On average, more construction workers are employed in the third and fourth quarter each year, than the first and second quarter. In a competitive market, construction companies have lower operating costs with fewer employees – which could partly explain a cost difference when costs are passed onto the consumer. Another possible explanation would arise from reduced workloads in early months of the year (explaining the need for fewer employees) creating an incentive to reduce costs to attract more business.

Sometimes the best deals can be found when others aren’t looking.