Is building a house a terrible idea right now?

[Tom Seigold]

I'm on the fence between building a house (for myself, not an investment property) versus buying an existing one.  And then, in either case, renting out my existing home.

Building a house has a few things going for it, including some decent grants in my area if I build in a neighborhood that my city is trying to breathe life into.

I see lumber prices are still through the roof right now.  Between that and the labor shortage, I assume building a home in 2022 is going to cost more than it likely will in 2023.  Am I correct in that assumption?  On the other hand, homes are still being constructed- I'd have guessed everyone would be waiting until lumber prices fell before building again, with the exception of very hot markets.  What am I missing?  Is it smart to rule construction out right now, or is the difference in cost not as big as I think it is?