Richmond Housing Market Update: Why More Buyers Are Choosing to Build Custom

Last updated 9 September 2026. We keep this one page current instead of publishing a fresh market post every quarter, so the link you save today still holds next season.

If you have been house hunting around Richmond lately, the shape of the problem has not changed: there are not enough homes, the good ones go quickly, and plenty of what is left needs real money spent before it feels like yours.

What has changed since our last update is the money. Mortgage rates fell through the early part of 2026, dipped briefly below 6% in late February, and have since climbed back to the highest level we have seen this year. Building materials, which looked settled six months ago, are now being pushed around by tariffs.

So this is a more mixed update than the last one. Here is what the data actually says — including the parts that argue for waiting.

What Has Changed Since the Last Update

• Rates went up, not down. The 30-year fixed averaged 6.71% for the week ending 3 September 2026 — a 2026 high, and roughly three-quarters of a point above February's 5.98% low. (Freddie Mac PMMS)
• Tariffs are now a real line item. Canadian softwood lumber, steel, aluminum and cabinetry all carry tariffs. NAHB puts the typical effect at about $10,900 per home. (NAHB)
• Inventory is still tight. 1.8 months of single-family supply across the Richmond metro, down 5.3% year over year. (RAR/CVRMLS, July 2026)
• New homes now cost less than resale — by the widest margin on record. Nationally, the median new home sold for $410,700 in Q2 2026 against $435,700 for an existing one. (NAHB, September 2026)

The Big Picture: Richmond's Market Is Still Tight

The fundamental problem has not moved. There are not enough homes in the Richmond metro for the number of people who want to buy them, and that has been true for years.

The current numbers, covering Chesterfield, Hanover, Henrico and Richmond City (RAR/CVRMLS Housing Supply Overview, July 2026):

• Median sale price: $440,000 for single-family homes, up 2.3% year over year
• Months of supply: 1.8 months for single-family — down 5.3% from a year ago, and still far below the 4–6 months that define a balanced market
• Inventory: 1,590 single-family homes on the market, down 5.3%
• Across all property types the median is $420,000, up just 0.4%

The quarterly picture is tighter still. In Q2 2026 the single-family median hit $455,000, homes sold in a median of 18 days — 10% faster than a year earlier — and the typical home sold for 101.5% of its original asking price (RAR/CVRMLS Quarterly Indicators, Q2 2026). Sellers are not just getting their price; on average they are getting slightly more than they asked.

To put 1.8 months of supply in perspective: if nothing new were listed tomorrow, every single-family home on the market would be gone in about eight weeks.

Richmond is also outrunning the rest of the state. Home sales here rose about 10% in the first half of 2026, against 5.5% statewide — the strongest growth of Virginia's ten metro areas.

The Problem with Resale: Richmond's Housing Stock Is Old

Here is the stat that surprises people. The typical home in the Richmond metro was built in 1993, which makes it 33 years old. In the city of Richmond proper the typical home dates to 1959. Roughly 70% of homes in the metro are more than 20 years old, and only about 1.6% were built in 2020 or later (U.S. Census ACS via Point2Homes).

In practice that means most of what you are bidding against comes with an aging HVAC system, an original roof nearing the end of its life, an electrical panel designed for a different set of appliances, and a floor plan drawn for how families lived thirty years ago. The "move-in ready" house you are looking at may need a roof in three years and mechanical systems in five — comfortably $20,000–$50,000 that never appears in the listing price.

Build new and all of that is current: insulation, windows, mechanicals, energy performance, and code. You are unlikely to face a major replacement for a decade or more.

Where the Growth Is: County by County

The most recent Census estimates show growth moving away from Northern Virginia and toward the Richmond metro's outer counties — which is exactly where custom homes get built (Cardinal News / U.S. Census Bureau).

Chesterfield has added more residents than any other locality in Virginia — 36,753 since 2020, a 10.1% increase. Median list price in August 2026 was $459,990, up 2.4% year over year, at $216 per square foot. Strong schools, expanding infrastructure and communities like Summer Lake keep building in Chesterfield one of our busiest areas.

Henrico remains the metro's most established suburban market, with an August median list price of $425,000 — up 6.3%, the sharpest rise of the three — at $237 per square foot. The Short Pump corridor and River Road continue to draw buyers; here is what building in Henrico involves.

Hanover is the steady one: a mature market where the August median list price was $549,970 at $244 per square foot, and where homes moved 21% faster than a year ago. It draws families for the schools and the semi-rural feel.

Goochland is the premium custom market and grew 15% since 2020. Large lots, James River access and a low effective property tax rate keep it the choice for buyers who want land and privacy.

New Kent is the headline: the fastest-growing county in Virginia, up 21.5% since 2020, from 22,945 residents to 27,872. For buyers who want more affordable land between Richmond and Williamsburg, it keeps climbing the list.

Powhatan rounds things out with a rural feel, available land and steady custom activity. Sale prices there swing hard from quarter to quarter because the volume is low, so treat any single median with caution.

County list prices above are Realtor.com figures for August 2026, published via FRED. They are asking prices, not closing prices, so they sit above the MLS sale medians earlier in this post.

Mortgage Rates: Where They Stand Now

This is where the picture turned since our last update.

The 30-year fixed averaged 6.71% for the week ending 3 September 2026, up from 6.66% the week before and 6.50% a year earlier. The 15-year averaged 6.04%. That is the highest reading of 2026 and the highest since July 2025 (Freddie Mac PMMS).

The move was not driven by housing. A global bond sell-off — energy costs, national debt, and the conflict with Iran — pushed the 10-year Treasury to its highest level since October 2023, and mortgage rates followed. Freddie Mac notes that purchase demand has nonetheless stayed relatively stable, with buyers adjusting rather than retreating.

We are not going to tell you rates are about to fall. Forecasts published in January called for roughly 6.2% across 2026 and have already been overtaken by events. Anyone quoting you a confident number for next spring is guessing.

What does apply specifically to building: a construction-to-permanent loan lets you lock your rate at the outset, before the house is framed, with interest-only payments during construction. In a market moving this way, locking early is worth more than it was when rates were falling.

Construction Costs: Materials, Tariffs and Labor

Six months ago this section said costs had stabilized. That is no longer the whole story.

The good news first: lumber itself is calm. Futures traded around $565 per thousand board feet on 9 September 2026, down about 3% year over year and roughly two-thirds below the May 2021 peak of $1,711 (Trading Economics).

The complication is trade policy. Canada supplies about 85% of U.S. softwood lumber imports and close to a quarter of total U.S. supply, and that lumber now carries combined antidumping, countervailing and Section 232 duties in the mid-30% range. Steel and aluminum carry a 50% Section 232 tariff. Kitchen cabinets, vanities and furniture carry 25% through the start of 2027. NAHB's survey work puts the typical cost effect of recent tariff actions at about $10,900 per home, with more than 60% of builders reporting higher costs (NAHB).

Labor is the other pressure. Wages for non-supervisory home building workers rose 9.2% in July, well ahead of inflation, and the industry needs roughly 349,000 net new workers this year just to stand still. Nearly 40% of skilled construction workers are now over 45.

What a custom home costs to build in the Richmond area, house only, excluding land:

• $175–$200/sq ft for entry-level custom with standard finishes
• $200–$250/sq ft for mid-range custom — where most of our builds land
• $300+/sq ft for high-end work with premium finishes and specialty spaces

Those ranges have held through 2026 so far. At Keel, pricing is refined during preconstruction as plans, selections, and site requirements come together. That process accounts for current material and labor costs, giving you a clear understanding of your home's scope and price before construction begins, which matters most when the inputs underneath it keep moving.

The National Picture: Custom Building Is Holding Its Ground

Custom building is not booming, and we would rather say so than tell you otherwise.

There were 49,000 custom home starts nationally in Q2 2026 — down 9% from a year earlier. Over the trailing four quarters, 183,000 custom homes were started, effectively flat against the prior 184,000 (NAHB Eye on Housing, August 2026).

The interesting part is the share. Custom now accounts for about 20% of all single-family starts, because overall single-family construction fell nearly 7% over the first seven months of 2026 — considerably more than custom did. NAHB chief economist Robert Dietz calls custom building "a relative bright spot for the residential construction industry." Custom is less sensitive to the rate cycle than spec building and more sensitive to household wealth, so it holds up better when financing gets expensive.

And the price comparison has never favored new construction more. In Q2 2026 the median new single-family home sold for $410,700 nationally, against $435,700 for an existing home — a $25,000 gap, the widest on record, and a reversal that has now held in six of the last nine quarters (NAHB, September 2026).

That gap is partly compositional: builders have responded to affordability pressure with smaller homes, smaller lots and incentives. It is still a real result. The assumption that new construction automatically carries a premium is out of date.

So Is Now a Good Time to Build in Richmond?

The numbers are leaning hard in favor of building now.

Inventory is still scarce at 1.8 months, and homes are selling above asking, so competing on the resale market means paying up for someone else's thirty-year-old house, with someone else's finishes and someone else's floor plan. The metro's housing stock is genuinely old, and growth is concentrated in exactly the counties where building is practical. New homes are cheaper than resale nationally by a record margin. And a construction-to-permanent loan lets you lock in your rate now instead of betting on where rates land next year.

The one exception worth naming: if your budget truly only works at a lower rate than what's available today, it makes sense to wait until the math changes. But for most buyers, that is not the actual constraint, and waiting rarely improves your position. Rates are elevated, yes, but costs are more likely to climb than fall from here. Labor is short, wages are climbing 9% a year, and tariffs are adding real cost to a build with no clear relief in sight.

If you are building because you want a specific house on a specific piece of land, the market conditions are secondary and the resale alternative is thin right now. And if you are weighing building against buying resale purely on the numbers, run them at today's rate. For most people, that math points one direction: now is the time to move.

Ready to Talk It Through?

At Keel Custom Homes we build custom and semi-custom homes across the Richmond metro — Chesterfield and Henrico through to Goochland, Hanover, New Kent and Powhatan. Builds typically run $175 to $300+ per square foot depending on finishes and floor plan, and we handle lot evaluation, design, permitting and construction.

If you are weighing this up, we are happy to walk you through it — timeline, real costs, and whether building actually makes sense for you right now. If the answer is "not yet", we will say so.

Sources for this update include the Richmond Association of REALTORS® and Central Virginia Regional MLS, Freddie Mac, NAHB and Eye on Housing, the U.S. Census Bureau, Realtor.com via FRED, Trading Economics, and Cardinal News. All figures reflect the most recent reports available as of 9 September 2026, and each is linked at the point it is used.