The Short Version
- Non-labor inputs to new homes cost 10.3% more than a year ago in September, the highest annual rate since May 2022 (our check).
- The 30-year held at 7.40%, ending seven straight weekly rises.
- 57% of builders are short of in-house framing crews, up 9 points (NAHB).
- 81% of NKBA's kitchen respondents rate zoned layouts "here to stay," reversing its 2026 report.
- The feature: write the escalation clause on the line that moves, both ways.
By the Numbers
30-Yr Fixed
7.40%
Unchanged W/W · Oct 15
Materials PPI Y/Y
+5.5%
▲ 0.4% M/M · Sept, first print
Labor Shortage
47%
▲ 5 pts vs Apr 2025 · Sept survey
New-Home Apps Y/Y
−8.3%
▼ 8% M/M (NSA) · Sept
This Week's Feature
Write the Price Escalation Clause on the Line That Moves
In September, BLS's index of energy inputs to residential construction rose 13.0% in a single month (NAHB on BLS, Oct 15). Softwood lumber fell 2.0%. Ready-mix concrete was flat. Steel mill products ended the month 27.6% above a year earlier. All four are first prints, in BLS's data (our parse).
A fixed-price quote absorbs every one of those moves. A blanket clause, "prices may rise up to 5%," gets them wrong both ways. On a framing-heavy job, it charges for lumber that just got cheaper. On a fabrication job priced a year ago, with steel an illustrative 40% of the contract, steel's 27.6% rise alone adds about 11% to the whole price (our arithmetic), more than twice what the clause allows.
The clause worth writing is tied to the line that actually moves on your jobs, and it moves the bill both ways. BLS publishes the indexes for it free, along with a guide to tying contracts to them, and its first worked example ends with the price going down.
Keep reading (8 min)Voice of the Builder
September's producer prices put inputs to new homes 10.3% above a year ago.
BLS's September producer prices, out Oct 15, put final demand up 1.3% in the month, seasonally adjusted, "the largest advance since rising 1.7 percent in March 2022," and 6.3% over 12 months, unadjusted, the largest such rise since December 2022, per BLS.
For builders, inputs to new residential construction, labor excluded, rose 2.0% in September and 10.3% on the year, unadjusted (NAHB), the highest annual rate since May 2022 in BLS's data files (our check, not NAHB's). All first prints, subject to revision.
What it means on your jobsite
Price every change order on a signed job from this week's supplier quote, not the unit costs in the original bid. Inputs to new homes ran 10.3% above a year ago in September; a change order priced off last fall's bid can hand the client that increase on work the fixed price never covered.
- MBA's model puts new-home sales at their weakest since April 2020. Its estimate of the sales pace, 584,000 units, is derived from builders' mortgage applications plus assumptions: modelled, not Census's count (due Oct 27). MBA, Oct 15
- Inflation reached 3.7%. Consumer prices rose 3.7% in the 12 months to September, before seasonal adjustment; gasoline rose 9.1% in the month, "accounting for over half of the monthly all items increase." BLS, Oct 14
- Pending sales fell in all 50 big metros. "Pending sales declined year over year in all 50 of the most populous U.S. metro areas," and 22% of sellers with active listings cut their asking price, up from 20.9% a year earlier, the highest in Redfin's weekly records, which start in 2021. Four weeks to Oct 11. Redfin, Oct 15
Bright Spots
- Rates paused. The 30-year held at 7.40% after seven straight weekly rises (Freddie Mac history); the 10-year closed at 5.10% on Oct 15, its lowest close since Sept 22 (Treasury, our check). MBA forecasts the 30-year above 7% through 2027 (MBA, Oct 12): a pause, not a turn.
- Machinery and insurance ran under inflation. On the year to September, BLS's indexes for construction machinery rose 1.7% and property and casualty insurance premiums 1.2%, both below CPI's 3.7% (first prints, our parse of BLS data).
- Younger crews are coming in. Gen Z went from 6.4% of the construction workforce in 2019 to 16.8% in 2024, in the American Community Survey. NAHB, Oct 13
Then again: Labor is the caveat for a second week, now with numbers: 57% of builders NAHB surveyed are short of in-house framing crews, up 9 points, and 59% of subcontracted ones; the median rise in direct labor cost for the same home was 4.2% over 12 months (NAHB, Oct 14), 4.7% for builders with five or fewer starts (survey). Get your framer's start date and price in writing before a start date goes into a client's contract.
Hot Markets
| Metro | Sellers vs. buyers, Sept | Read |
|---|---|---|
| San Francisco | 10.6% fewer sellers | Median sale price +18.1% Y/Y, top of the 50 |
| Milwaukee | 16.1% fewer sellers | One of five seller's markets, two months running |
| Detroit | 37.9% more sellers, from 46.5% | Warming, not hot: one of two where buyers lost ground |
Redfin's Buyers vs. Sellers, Oct 14, counts MLS listings as sellers and estimates buyers from its own tour-to-close data and MLS pending sales, seasonally adjusted and revisable: a brokerage's read of resale. Nationally, 62.6% more sellers than buyers, the biggest gap in Redfin's records, which go back to 2013. Prices: Redfin's weekly data, four weeks to Oct 11.
Cooling: Tampa went from 82.2% in August to 103.7% more sellers than buyers, about two per buyer (our arithmetic), the biggest swing toward buyers after Miami's. Redfin, on Sun Belt markets: "Builders continue to add newly constructed homes even as buyer demand has cooled, contributing to a buildup of inventory." Building there, put the next start behind a signed contract, not a spec sheet.
Design Trends · Remodeling
Walls are coming back into the kitchen: 81% of respondents to NKBA's survey rate intentional zoning "here to stay."
NKBA's 2027 Kitchen Trends Report (Oct 14) drew on 830 industry professionals across North America, 62% of them designers. It is paywalled, so the figures come via Kitchen & Bath Business, Oct 15. Semi-enclosed layouts (46%) are named up-and-coming, and 52% expect kitchen footprints to grow over the next three years, down from 76% in the 2026 report. NKBA's 2026 report, which issue 02 cited, had open layouts "in the growth phase"; KBB calls the 2027 report a reversal. These are the trade's forecasts, not measured homeowner choices.
How to sell it
Sell the reconfiguration, not just the finishes. Respondents rank layout reconfiguration (49%) second for return, just behind cabinet upgrades (54%): opinion, not a measured payback, so promise none. A partial wall, a back kitchen or an attached mudroom is framing, electrical and drywall; price each as its own line. While the walls are open, add leak detection and an automatic shut-off valve (65% agree on the pair).
AI on the Jobsite
Rehearse the price-increase call with the model playing your client
One small online experiment, not a field result: in Rehearsal (CHI 2024), 40 recruits trained on either a lecture or the lecture plus a purpose-built simulator, then argued a chat conflict with a researcher. Against the lecture group, simulator users cut escalating competitive strategies by 67% on average and doubled cooperative ones. Your chatbot isn't that tool and nobody tested contractors: borrow the move, not the result. Describe the client by role, not name; if you paste the old quote or thread, delete names, addresses, phone numbers, emails and account numbers first.
Copy this prompt
Play my client so I can practice a hard conversation. You are [a homeowner whose kitchen I quoted in July; they haven't signed, and I now need to raise the price 6% because material and fuel costs moved]. Stay in character. Push back the way a reasonable but worried client would: ask why, what changed, what I'm doing about it, and for a discount. Ask one thing at a time and wait for my answer. Don't coach me during the conversation. When I type "stop", step out of character and list every answer where I gave ground without a reason, every vague word I used instead of a number or a date, and every question I didn't answer. Don't write the message for me.
Time saved: None measured; the study counted strategies, not minutes. Score the outcome instead: after a rehearsal, did the client agree on the first call?
JobTread Tip of the Week
Send the revised price as a proposal the client signs
JobTread's description, quoted rather than turned into steps, covers how to "select and organize budget items," "customize the document layout," "adjust viewing and access settings," and "send for customer review and signature." Approved proposals, it adds, "update your Budgeted Cost column." The pairing is ours: send the revised proposal the same day you make the call.
The Punch List
- Producer Price Indexes, September — BLS, Oct 15
- Labor Shortages a Growing Problem — NAHB, Oct 14
- Builder Application Survey, September — MBA, Oct 15
- Primary Mortgage Market Survey — Freddie Mac, Oct 15
- Next prints: single-family starts Oct 20, new home sales Oct 27 (Census); LIRA Oct 22 (Harvard JCHS); FOMC Oct 27–28
Quitting Time
What's the difference between a rough estimate and a final invoice?
About four months and a change order.