Central Iowa homeowners face a tough choice in 2026: finish your basement now or hold off for potentially better conditions? This guide breaks down the current mortgage rates, material costs, labor market trends, and Des Moines housing data to help you make a smart decision. You’ll learn exactly what factors should drive your timing and how to maximize your investment regardless of when you start.
TLDR: Mortgage rates hover around 6.0% to 6.3% in 2026, close to the 60-year historical average. Material costs continue rising 2% to 4% annually, and labor shortages add further pressure. Industry experts say rates likely won’t return to the 3% to 4% range anytime soon. If you need the space, have stable finances, and plan to stay at least three years, finishing now may save you money compared to waiting.
Why Timing Matters for Your Basement Project
You’ve thought about finishing your basement for months. Maybe you need a home office, a guest suite, or extra space for the kids. But one question keeps nagging at you: should you wait for better conditions?
The honest answer depends on several market factors working together. Mortgage rates affect your financing costs. Material prices change how much you’ll spend on drywall, lumber, and finishes. Labor availability determines both your timeline and your bottom line.
In this guide, we’ll examine current 2026 data from industry experts and help you create a clear decision framework. By the end, you’ll know whether finishing now makes sense for your situation or if waiting could pay off.
Current Mortgage Rates in 2026
Understanding mortgage rates helps you plan your basement finishing budget more accurately. Here’s what the experts forecast for 2026.
What Industry Experts Predict
Current 30-year fixed mortgage rates sit around 6.03% to 6.15% as of January 2026. This marks the lowest level in over three years. Major forecasters expect rates to stay relatively stable throughout the year.
The table below shows predictions from leading industry sources:
| Source | 2026 Forecast | 2027 Forecast |
|---|---|---|
| Fannie Mae | 6.0% | 5.9% |
| National Association of Home Builders | 6.17% | 6.01% |
| Mortgage Bankers Association | 6.4% | 6.4% |
| Bankrate | 6.1% average | Not available |
These forecasts suggest rates may dip slightly but won’t return to the 3% to 4% levels from 2020 and 2021. The current 6% range actually sits close to the 60-year historical median for mortgage rates.
Tip: Lock in your rate early if you plan to finance your basement project. Small rate fluctuations can add thousands to your total cost over a loan’s lifetime.
Material Cost Trends for 2026
Construction materials continue their upward trend, though the pace has slowed from pandemic-era spikes.
Lumber Prices
Lumber currently trades around $598 per 1,000 board feet, up about 6.89% compared to last year. Industry analysts expect prices to average in the mid-$500s to low-$600s throughout 2026. Potential tariffs could trigger 15% to 20% price jumps if trade policies change.
Concrete and Cement
Ready-mix concrete rose 6% to 8% over the past year. Portland cement increased 7% to 10% due to energy costs. Experts forecast another 4% to 6% increase in 2026.
Overall Material Outlook
The table below summarizes expected material cost changes:
| Material | Current Trend | 2026 Forecast | Impact on Projects |
|---|---|---|---|
| Lumber | Up 6.89% year over year | Mid-$500s to $600s average | Moderate upward pressure |
| Concrete/Cement | Up 6% to 8% | Additional 4% to 6% | Steady increases |
| Overall Materials | Up 2.8% year over year | Up 2% to 4% | Modest inflation |
| Labor | Rising faster than materials | Continued pressure | High cost impact |
When adjusted for general inflation, construction costs remain largely flat according to industry economists. However, labor costs now exert more upward pressure than materials.
Labor Market Challenges in Iowa
The construction labor shortage affects project timelines and costs throughout Central Iowa.
National Workforce Needs
The construction industry needs approximately 349,000 net new workers in 2026 according to industry reports. That number jumps to 456,000 in 2027. About one-fifth of electricians are over age 55, creating future workforce gaps.
Iowa-Specific Challenges
Iowa’s construction workforce includes roughly 75,000 professionals. However, the state faces persistent shortages, especially for electricians and project superintendents. Iowa’s overall labor force has declined 2.6%, with about 45,000 fewer workers available compared to pre-pandemic levels.
Pro tip: Book your basement remodeling contractor early. Labor constraints mean longer wait times during busy spring and summer months.
Des Moines Housing Market Outlook
The local housing market affects both your project costs and potential return on investment when finishing your basement adds value to your home.
Current Market Conditions
Des Moines median home prices sit around $285,000 to $330,000 as of late 2025. Inventory reached a 12-year high in the fourth quarter, giving buyers more options. Statewide, Iowa home prices increased about 4.3% year over year.
2026 Market Predictions
Industry analysts named Des Moines as one of six housing markets “poised to blow up in 2026.” The area benefits from steady population growth, diverse employers, and housing costs below national averages. Experts predict steady, predictable appreciation throughout the year.
This matters for your basement project because home improvements in appreciating markets tend to deliver stronger returns. A finished basement in Des Moines could help you capture value in a strengthening market.
What Basement Finishing Costs in Des Moines
Understanding current costs helps you budget accurately and evaluate financing options for your project.
Current Price Ranges
| Project Type | 2026 Current Cost | If You Wait 12 Months (Estimated) | Difference |
|---|---|---|---|
| Basic finish (600 sq ft) | $22,000 | $23,100 to $23,800 | $1,100 to $1,800 |
| Mid-range with bathroom | $45,000 | $47,250 to $48,600 | $2,250 to $3,600 |
| High-end suite | $70,000 | $73,500 to $75,600 | $3,500 to $5,600 |
These estimates assume 4% to 8% cost escalation based on material and labor trends. Your actual costs depend on your specific basement factors in Des Moines like square footage, finish quality, and structural requirements.
When You Should Finish Now
Based on current 2026 market data, finishing your basement now makes sense if you meet these criteria:
Current mortgage rates work for you. Rates below 6.5% represent favorable historical conditions. Current rates of 6.0% to 6.15% are close to the lowest in three years.
You need the space. Don’t finish based on speculation. Finish because your family needs a home office, guest room, or entertainment space.
Your budget is ready. You can afford the project without stretching your finances too thin. Include a 10% to 15% contingency for unexpected costs.
You plan to stay at least three years. This timeframe allows you to enjoy the space and recoup your investment through home value appreciation.
Good contractors are available. Winter and early spring often offer better contractor availability before the busy summer season.
When You Should Wait
Waiting may make sense in specific situations:
Your financial situation is uncertain. Job instability or tight budgets mean now isn’t the right time to take on a major project.
You’re selling within 12 months. You likely won’t recoup full costs in such a short timeframe.
Rates exceed 7%. If rates spike significantly, waiting for a dip could save financing costs. However, current forecasts don’t predict major increases.
Your basement needs significant repairs. Address moisture, structural, or radon issues before finishing. These problems only get worse with time.
Central Iowa Considerations
Iowa presents unique factors that affect your basement finishing decision.
Radon Concerns
About 71.6% of Iowa homes have radon levels exceeding the EPA action level. Test your basement before finishing and install mitigation if needed. Radon mitigation typically costs $800 to $1,500 and protects your family’s health.
Moisture and Foundation Issues
Iowa’s clay soil and freeze-thaw cycles stress foundations. Address any water intrusion before finishing. Proper waterproofing now prevents costly repairs to finished spaces later.
Contractor Registration
Iowa requires contractors earning $2,000 or more annually to register with the Department of Inspections, Appeals, and Licensing. Always verify your contractor’s registration before signing any agreement.
Important: Work with registered contractors who understand Iowa building codes, including egress window requirements for basement bedrooms.
Frequently Asked Questions
Q: Will mortgage rates drop significantly in 2026?
A: Industry experts predict rates will average 6.0% to 6.3% throughout 2026. While temporary dips to 5.7% to 5.9% are possible, rates likely won’t return to the 3% to 4% range seen in 2020 and 2021. The current 6% level sits close to the 60-year historical median.
Q: How much will construction costs increase if I wait a year?
A: Based on current trends, waiting 12 months could add 4% to 8% to your total project cost. On a $50,000 project, that means paying $2,000 to $4,000 more. Material and labor costs continue rising, with labor increasing faster than materials.
Q: Is the Des Moines housing market good for home improvements?
A: Yes. Analysts named Des Moines among the top markets for 2026. The combination of steady appreciation, diverse employment, and affordability creates favorable conditions for home improvement investments.
Q: How do I know if my basement is ready to finish?
A: Your basement should be dry, structurally sound, and free from radon concerns before finishing. Look for water stains, cracks, or musty odors. Address any issues before starting construction.
Q: What’s the average timeline for finishing a basement in Des Moines?
A: Most basement finishing projects take 6 to 12 weeks depending on scope. Projects with bathrooms or significant electrical work may take longer. Labor shortages can extend timelines, so plan accordingly.
Q: Should I finance my basement project or pay cash?
A: This depends on your financial situation and current rates. Home equity loans or HELOCs offer favorable rates for home improvements. Compare financing costs against opportunity costs of depleting savings.
Q: What permits do I need for basement finishing in Iowa?
A: Most basement finishing projects require permits for electrical, plumbing, and structural work. Permit costs typically range from $200 to $1,000. Your contractor should handle the permit process.
Q: Will a finished basement increase my property taxes?
A: Possibly. Adding finished square footage can increase your home’s assessed value. However, the benefits of increased home value and usable space typically outweigh modest tax increases.
Q: What’s the ROI on basement finishing in Iowa?
A: Finished basements typically recoup 70% to 75% of costs at resale according to the National Association of Realtors. The space also provides immediate lifestyle benefits that pure ROI calculations don’t capture.
Q: How do I choose the right contractor?
A: Get at least three quotes from registered contractors. Check references, verify insurance, and review past projects. Choose a contractor who communicates clearly and understands Iowa building requirements.
Key Takeaways
Market Timing
- Mortgage rates around 6% are historically favorable
- Material costs rising 2% to 4% annually
- Labor shortages continue putting upward pressure on costs
- Waiting likely means paying more, not less
Financial Planning
- Budget 10% to 15% contingency for unexpected costs
- Explore home equity financing at current rates
- Consider total cost of ownership, not just project cost
- Factor in potential home value appreciation
Iowa-Specific Factors
- Test for radon before finishing
- Address moisture issues first
- Work only with registered contractors
- Understand egress window requirements for bedrooms
Decision Framework
- Finish now if rates are favorable and you need the space
- Wait if your finances are uncertain or you’re selling soon
- Don’t time the market based on rate predictions
- Focus on your family’s needs and financial stability
Ready to Discuss Your Basement Project?
You now understand the market factors affecting your basement finishing decision in 2026. Current conditions favor moving forward if you need the space and have stable finances. Waiting likely means higher costs without significantly better rates.
Busy Builders has helped over 1,000 Central Iowa homeowners since 2020. We bring transparency, expertise, and integrity to every project. Our team understands Iowa building codes, radon requirements, and local market conditions.
Here’s what we offer:
- Free consultation to discuss your goals and budget
- Accurate cost estimates based on current material and labor rates
- Local knowledge of permits, codes, and best practices
- Experienced crews with years of Central Iowa construction experience
- Transparent communication throughout your project
- Warranty on workmanship
Ready to move forward? Contact us today:
Call: 844-435-9800
Website: https://busybuildersiowa.com/
We serve Des Moines, West Des Moines, Ankeny, Waukee, Urbandale, and all Central Iowa communities. Schedule your free consultation today and get clarity on your basement finishing project.
Busy Builders | Full-Service Construction and Remodeling | Serving Central Iowa Since 2020
Disclaimer: This analysis reflects current economic forecasts as of January 2026. Material costs, labor rates, and mortgage rates may vary. Consult with your financial advisor before making major home improvement financing decisions. Your specific project costs will depend on basement condition, size, and finish level.
