Escalation Clauses in New Home Building: Why Anthem Homes Doesn’t Use Them and What That Means for You

April 16, 2025

 

Buying a new home should be an exciting milestone—not one clouded by financial uncertainty or last-minute surprises. But in today’s housing market, some homebuyers are discovering that the price they signed on their purchase agreement isn’t always the price they end up paying. That’s because some builders now include what’s called an escalation clause in their purchase contracts.
 
Read on to learn what they are—and why Anthem doesn’t use them.

What is an Escalation Clause in New Home Construction

An escalation clause is a provision in a purchase contract that allows the builder to raise the price of a home between the time the agreement is signed and time of closing.
In new home construction, escalation clauses are typically tied to increased construction costs driven by rising material costs, supply chain fluctuations, or labour shortages.
If costs rise during the construction period, the builder can pass them onto the buyer—even after the agreement has been signed, often catching buyers off guard just when they should be celebrating.

2025 Alberta Real Estate Market: Opportunity Meets Tariffs

Alberta’s real estate market continues to be fast-paced and full of opportunity, driven by steady population growth, job gains, and sustained demand for new homes across Calgary, Edmonton, and rural centres like Grande Prairie.

Creb’s 2025 Forecast Calgary and Region Yearly Outlook Report indicates this momentum is expected to continue through 2025 supported by increasing housing supply and easing interest rates.

However, the report also notes economic risks that could impact the cost of new home construction. In 2025 and beyond, the economic climate includes the threat and implementation of tariffs on goods and materials imported into Canada, adding significant pressure to the cost of construction.

Prices for building materials like lumber, steel, and aluminum are becoming more expensive and increasingly unpredictable. To manage these risks, many other builders are turning to escalation clauses as a safeguard.

What Escalation Clauses Mean for Homebuyers: The Risks

Escalation clauses shift financial risk from the builder to the homebuyer, introducing several consequences.

• Surprise & Stress
  Instead of celebrating your new home, you’re left scrambling to cover unexpected costs. Buyers may not even realize an escalation clause was included in their contract—or they may have overlooked it—leading to surprise and confusion at closing.
• Budget Uncertainty
  With the final price potentially increasing at close, you’re left in limbo—unable to plan or spend money with confidence. That uncertainty can stall financial decisions and force buyers to keep funds on standby, just in case.
• Financing Complications
  Since mortgage pre-approvals are based on the initial purchase price, a higher final price may require you to requalify for a loan, borrow more, or secure additional funds.

 

Examples: How an Escalation Clause Might Look in a Purchase Agreement

A Contractual Example:
Here’s a sample escalation clause, as published by the National Association of Home Builders and how it could appear in a real purchase agreement.

A Real-World Example:
Here’s a simplified example of how an escalation clause may affect the final price in a new home purchase:

Spring 2025
You sign a purchase agreement for a new home that includes an escalation clause.

Purchase Agreement Price: $600,000
Estimated Completion: 9-12 months

You:

• Lock in your mortgage pre-approval
• Budget for move-in and begin planning
• Make other financial decisions based on the agreed price

_______________________________________________________________________________

In the months that follow…

• The cost of lumber and other materials rise
• Labour shortages increase production costs
• Supply chain issues increase overall expenses

________________________________________________________________________________

Because of the escalation clause in your contract:

Your builder adjusts the final purchase price at closing to account for their increased construction costs.

Revised Price at Closing: $630,000

You:

• May not have the additional closing funds
• Could face tighter financial constraints
• May need to requalify for a higher mortgage

_________________________________________________________________________________

The result?

You’re responsible for paying $30,000 more than expected. And because the escalation clause was in your contract, you’re legally required to pay the difference—or risk losing your deposit and your new home.
 

The Anthem Difference: Price Certainty You Can Count On

At Anthem, we manage rising construction costs behind the scenes, without using escalation costs.

Why? Because our customers come first—and transparency is part of that promise. Here’s what that means for you:

Price Predictability
The price you sign for is the price you’ll pay—no matter how or if construction costs change. Even if material prices rise, your price stays locked in, giving you predictability from day one.
Plan & Secure Finances with Confidence
Budget and secure financing knowing your final price won’t change. Without escalation clauses, you can move forward confidently and with financial clarity.
Peace of Mind to Focus on What Matters Most
Instead of worrying about unexpected costs, focus your energy on the exciting parts of the homebuying journey—like designing your home, choosing finishes, and planning your move.
Trust from Start to Finish
We deliver what we promise—no hidden clauses, no fine print. Just a builder committed to transparency, long-term relationships, and building homes with integrity.

Final Thoughts: What You See is What You Pay

In Alberta, escalation clauses are common, and often buried in the fine print. That’s why one of the most important questions to ask when buying a new home is:

“Does your contract include an escalation clause?”

It’s a simple question that can save you thousands—and a whole lot of stress.
Anthem’s no-escalation clause policy means the price you agree to is the price you’ll pay. No surprises—just a straightforward path to owning your new home.