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Finding the perfect house can be difficult, especially when inventory is tight. If the homes in your intended area are too big, too small, or not quite right, you might consider building a house from scratch.
While there’s more work involved, this could be a cheaper option that allows you to customize your home.
Here’s what to know about the costs involved in building a house:
- What’s the average cost of building a house?
- Is it cheaper to build or buy a house?
- The factors behind your homebuilding costs
- Breakdown of homebuilding costs
- How to calculate the cost of building a house
- What you can afford by budget
- When to consider building a house
What’s the average cost of building a house?
A new home costs $100 to $200 per square foot to build, according to HomeAdvisor, but recent data suggests you’d have a difficult time building a house at the lower end of that range.
Building costs vary by location, size, and the style of the home. You’ll also need to factor in the cost of labor, building materials, and interior finishes.
All of these factors can drive the per-square-foot cost up to $400 or more in expensive cities like New York and San Francisco. Home prices have also gone up during the pandemic due to high demand and limited inventory.
Is it cheaper to build or buy a house?
Depending on the size of your home and the customization you need, it could be cheaper to buy an existing home. Here’s a comparison of median prices for new and existing homes as well as the average cost to build a home:
- Building a home: $283,965
- Buying a new home: $416,900
- Buying an existing home: $358,0003
If you decide to buy a home, you’ll want to shop around for a good mortgage rate. Credible allows you to compare mortgage rates from all of our partner lenders hassle-free.
The factors behind your homebuilding costs
The cost of building a new home varies, based on a number of factors. If you’re thinking about taking this route, consider the following factors. The tables below use data sourced from HomeAdvisor unless noted otherwise.
The size of your new home will greatly influence the cost. Generally, a larger home costs more to build because you’re using more materials. The median size of a new single-family home as of November 2021 was 2,337 square feet, according to the Census Bureau.
Here’s what you might pay to build a home assuming a $178 cost per square foot:
|Square footage||Price range|
Learn More: How to Buy a New Construction Home
Location impacts the price of construction in a few ways. The same house in one state might cost twice as much to build as it would in another because of variations in the cost of labor, materials, regulations, and permit requirements.
Plus, the actual site of the home — with its unique size, shape, soil, and climate — will also impact the cost. For instance, steep slopes or poor soil will typically require more engineering and foundation work.
Here’s what it can cost to build a home in certain U.S. cities. The price listed is the high-end average cost of actual home building projects as reported by HomeAdvisor members, but your home’s final cost may vary substantially:
|City||Price range to build a home|
|New York City||$850,000|
Labor costs account for about 40% of the home-building budget. These labor costs vary with each region, the size and complexity of the house, and your general contractor’s buying power. Larger homes that require more customization cost more than smaller homes that are built using prefabricated pieces.
Some of the professionals who you may hire include:
|Labor professional||Price range|
|Construction manager||$4,000 to $43,000 total|
|Electrician||$50 to $100 per hour|
|Roofer||$5,000 to $10,000 total|
|Plumber||$50 to $200 per hour|
|Concrete contractor||$4,000 to $13,000 total|
|Framer||$10 to $20 per square foot|
The materials used to build your home may take about 50% of your total budget. But the cost is heavily influenced by the quality of the material you choose. When you’re in the planning stages, you can work with the builder to choose materials that fit within your budget. They’ll give you an estimate based on your designs.
Here’s a cost breakdown of some of the basic materials your builder will need to buy:
|Lumber||$25,000 to $65,000 total|
|Concrete||$1,000 to $10,000 total|
|Drywall||$10 per sheet|
|Flooring||$1 to $5 per square foot|
|Siding||$2 to $15 per square foot|
If you’re looking to build a luxury or custom home, the price per square foot increases to $200 to $500 per square foot. But you can add one or two special features — such as a swimming pool, heated floors, higher ceilings, or a basement — to better fit your budget.
Amenities like these can help you enjoy your new home, but they’ll increase your budget accordingly. Here’s the price tag on a few popular features:
|Special feature||Price range|
|Swimming pool||$36,750 to $66,500 total|
|Heated floors||$6 to $20 per square foot|
|Basement (unfinished)||$10,000 to $30,000 total|
|Outdoor deck||$4,087 to $11,234|
Find Out: How to Buy a House: Step-by-Step Guide
Breakdown of homebuilding costs
The cost of building a house varies depending on where you’re building, the size of the home, the materials you use, and other factors, but the following cost breakdown should give you an idea of the price ranges you can expect:
|Type of cost||Price range|
|Clearing land||$4,500 to $150,000|
|Paying for house plans||$2,000 to $8,000|
|Getting building permits||$400 to $2,250|
|Laying the foundation||$16,600 to $72,000|
|Framing the house||$16,600 to $95,000|
|Interior finishes||$42,000 to $167,000|
|Installing major systems||$17,000 to $72,000|
Buying and clearing land: $4,500 to $155,000
Before you build a home, you’ll need to buy a plot of land. The average lot size is nearly 22,100 square feet, or about a half-acre, according to the National Association of Home Builders (NAHB).
Depending on the size you choose and whether utilities and sewer lines are available, a piece of land may range from $3,000 to $150,000, although it can be much more in higher-cost areas. Then, hiring people to clear your land for construction prep costs between $1,500 and $5,000.
Paying for floor plans: $2,000 to $8,000
Once you’ve bought your land, you’ll need to hire professionals to draw up floor plans for the house. You might pay about $2,000 to $8,000 for the plans, which you’ll hand to your builder. They’ll use the plans to give you a “cost to build” estimate.
Keep Reading: Best Time to Buy a Home
Getting building permits: $400 to $2,250
A building permit is a document that says you’ve received permission from your local government to begin the home building process. Once the construction is complete, it will go through inspections before the permit can be approved and closed out.
Laying the foundation: $16,600 to $72,000
Laying a foundation involves digging space for the foundation, preparing the land, pouring the concrete, and getting it to set right. You might also need to perform some additional landscaping to address any potential issues with the foundation.
This all-important phase costs anywhere from $16,600 to $72,000, depending on the location, size of the home, and the type of foundation you choose.
Framing the house: $16,600 to $95,000
After laying the foundation, your builder creates the frame, which is like the skeleton of the house. The type of frame you choose will greatly influence the price tag, which runs from $16,600 to $95,000.
The framer will take care of:
- The home’s overall frame
- Trusses and general metal work
- Sheathing and subfloor installation
- Windows and door installation
Interior finishes: $42,000 to $167,000
The interior finishes basically turn your structure into a home. These include things like insulation, walls, flooring, interior doors, fixtures, cabinets, and countertops. The builder will also paint walls and hook up major appliances.
Installing major systems: $17,000 to $72,000
Major systems consist of your plumbing and HVAC systems. Once installed, your builder will connect these systems to the local utilities. Expect this to cost $17,000 to $72,000 depending on the size of the home, type of systems you’re installing, and the quality of the materials.
How to calculate the cost of building a house
Homebuilders’ price estimates are based on expert knowledge and experience, and they factor in every aspect of the structure, systems, and finishes of a home. But you can get a ballpark figure for the cost of building your own home by using their prices as a starting point.
To calculate the cost of building a home, you’ll want to take the following steps:
- Determine the size, style, and location. Have a general idea of how big you want your home to be, the type of finishes you want, and where you’d like to build it.
- Shop local builders’ websites. To get an idea of what builders are charging for homes similar to yours, check out their websites and request quotes. Be sure to match features like garages, the number of roof angles, how many floors there are, the type of foundation, and the construction materials.
- Do the math. Average the sizes and prices of homes you like, and divide the average price by the average square footage. Use that price-per-square-foot figure as a guide when you’re browsing building plans.
- Research finishes and features. Look into the finishes and features that come with comparable homes, and make adjustments for your own preferences. Characteristics like builder-grade carpet versus hardwood flooring and vinyl siding versus fiber cement siding can mean a difference of tens of thousands of dollars in otherwise identical homes.
- Calculate the cost of acquiring land. If you don’t already have a building lot, you’ll need to buy the land to build your home on. You can search listings on real estate portals like Redfin, or work with a local real estate agent.
- Factor in the cost of preparing the lot. Unless it’s already clear and has access to utilities, you’ll have to make some phone calls to determine the costs involved in completing that work.
- Don’t forget about permits and inspections. Builders’ prices often include required permits and inspections. If the comparable homes you researched didn’t include those, contact your local zoning office to find out what’s required and how much it costs.
- Add the cost of your blueprints. You’re going to need to hire a draftsperson to create a home blueprint or house plan. Costs vary widely according to the complexity of the design and whether you select off-the-shelf prints or opt for a custom home design.
Leave room for overruns. Leave room in your budget for unexpected expenses and cost overruns.
What you can afford by budget
Building a new home is expensive, but you can control costs by building only as much home as you need, keeping the design simple, and resisting the temptation to go overboard on upgrades. Here’s what you can expect for various budget levels.
At $178 per square foot, you can build a house of up to 1,100 square feet. That’s enough space for two bedrooms — three if they’re on the small side — and two baths. Homes this size make good starter homes, downsizes, or investment properties.
$200,000 to $299,000
A budget in this range will get you 1,100 to 1,600 square feet, depending on the options you choose. At the high end, you can expect three bedrooms for sure, and perhaps four bedrooms or three bedrooms and a smaller home office. You might add a half bath and a porch, patio, or deck as well.
$300,000 to $399,000
This currently is the most common price range, and with it, you can expect roughly 1,700 to 2,200 square feet. You should be able to accommodate the most common home characteristics as well: at least three bedrooms and 2.5 baths, plus outdoor features.
If you want a more elaborate design or more bedrooms and baths, you might have to compromise on finishes to keep it within your budget.
$400,000 to $499,000
A budget in the $400,000s should get you a nice home up to about 2,800 square feet, with four bedrooms, three baths, higher-end finishes, and larger or more elaborate outdoor features, such as a covered porch instead of a bare-bones open deck.
$500,000 to $750,000
This is a high-end budget that will get you a premium home design with four to five bedrooms and perhaps a home office to boot, and at least three baths. Sizewise, you can afford 2,800 to 4,200 square feet.
Expect homes in this price range to come standard with more luxurious finishes, which means you might have to downgrade or simplify the design to stay in the lower range of the budget.
$750,000 and up
Only a small percentage of new-home buyers are currently spending this much on their homes. If you’re one of the lucky few, your budget will get you a house with at least 4,200 square feet, which is plenty of space for five to six bedrooms and three to four baths, plus a home office.
Again, the quality of finishes will be proportional to the value of the home, but think twice before you opt for a cheaper finish to save money, as this may reduce the home’s resale value.
Credible is an online mortgage broker that allows you to easily compare rates. In just a few minutes, you can secure a streamlined pre-approval letter and see loan details from all of our partner lenders. We also provide transparency into lender fees that other brokers typically don’t.
When to consider building a house
While building a home can get pricey, the ability to customize the space makes the cost worthwhile to some homebuyers. Consider these pros and cons if you’re thinking about building a home:
|Pros of building a home||Cons of building a home|
|You can customize your own home.||It may be time-consuming to make a lot of decisions about the home’s build throughout the project.|
|New homes usually come with less maintenance.||A new-construction home may be more expensive than buying a pre-owned home.|
|You can choose the location of where you’d like to build the home.||Getting a mortgage for a construction project may be complicated.|
1U.S. Census Bureau and the U.S. Department of Housing and Urban Development
2 Quarterly Starts and Completions by Purpose and Design, U.S. Census Bureau
3Annual Existing-Home Sales Hit Highest Mark Since 2006, National Association of Realtors