2025 building costs and interest rates: Same but different2025 building costs and interest rates: Same but different
Hog barns have historically served as reliable equity builders.

Over the past several years, building costs and interest rates have emerged as critical factors for pork producers, shaping decisions around new construction and expansion. The dual pressures of escalating construction expenses and rising interest rates have placed significant constraints on development in the sector.
Last year, we explored the long-term trends in building costs and interest rates. We find an upward trajectory in both areas by revising the topic with updated 2024 actuals and 2025 projections. The following graphs, focusing on a standard 2,400-head wean-to-finish barn, provide a detailed analysis under the outlined assumptions.
15-year term loan
85% loan financing
Solid borrower credit
Southern Minnesota and Northern Iowa cost averages
Costs include all aspects except land
Rates may vary based on specific loan pricing, products, young farmer program qualifications and terms
Interest rates, recorded from early to mid-January each year, reflect conditions for borrowers with above-average credit. While overall site building costs can vary depending on factors such as equipment packages, material quality, and other variables, the trend presented here reflects the broader challenges faced by producers across the countryside.

Chart 1

Chart 2

Chart 3 Source: CNBC
There are a few key points to consider when analyzing this data:
Since 2019, overall building costs have risen by nearly 40%, with the most significant increases occurring after the onset of the pandemic. Over the past three years, costs have stabilized, though we’ve observed a slight year-over-year uptick. This increase is primarily due to modest rises in lumber prices and higher costs for service-based work such as electrical, plumbing and excavation.
Wouldn’t it be nice to return to the low interest rates of 2020–2022? Today, we’re navigating rates in the mid-7% range. While rates have remained relatively stable in recent years, they are slightly higher than this time last year. To illustrate the recent volatility, I’ve included the 10-year U.S. Treasury (Chart 2). As we approached the election, rates had dropped by nearly a full percentage point since mid-year. However, the financial market outlook and changes in the Federal Reserve’s stance have brought rates back above year-ago levels.
Chart 1 illustrates the loan payment per space based on current interest rates, building costs and the loan terms outlined above. While this figure has increased year-over-year, it remains slightly below the peak reached in 2023.
Despite the rising building costs and interest rates, constructing new grow-finish hog barns offers a few key benefits. First, the manure produced provides significant value for improving cropping operations. Second, hog barns have historically served as reliable equity builders. Additionally, the income generated from these investments can be strategically managed through depreciation.
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