One of the biggest investments you will probably ever make in your life is building your dream home. So it’s important to know how much you can expect to pay to build one. From the foundation to the exterior paint job, every aspect of house construction is a massive undertaking that is both complex and, without proper planning, expensive.
So, how much does it really cost to build a house? It’s a question that plagues us all. So, to help you answer this question, let us break down the details and the many components of building a house.
Building Your Own vs. Buying a House
Creating a realistic estimation of your overall budget requires some serious planning, research, and math. You can start by identifying the option that can give you the best value for money.
Is it cost-effective to build a house rather than buy one? With many considerations to factor in, this is an important question to ask yourself in the initial stage of planning. Before you lay out funds, and spend unnecessary time and energy deciding between buying or building a house, let us walk you through the compiled list of pros and cons of each approach.
Buying An Existing Home: Pros And Cons
If you prefer not to build a house from scratch, there are advantages and disadvantages to buying an existing structure.
Pros of buying a home:
- Move-in ready. You can move in more quickly, with less time spent waiting for the building of the house.
- Less expensive. You can take advantage of a more competitive price, lower down payment, and better interest rates.
- Landscape-ready. A turn-key home may have a mature landscape that you don’t have to plant and wait for years to see it grow.
- More flexibility. You can easily make changes to a pre-existing home and take advantage of existing upgrades, saving you time and money.
Cons of buying a home:
- Buying someone else’s problems. You might get stuck with a pre-existing problem such as a leaky roof or foundation issues that could cost a lot to repair.
- Hidden cost. Fixing an existing house can be expensive. Old homes may have hidden mold, lead paint, and other issues that the seller does not know about.
- Limited customization options. Making changes to an existing home’s structure can be very expensive. This option may not be best for you if you prefer a custom home.
- Less energy efficient. Older homes are not energy efficient, and you may end up spending much more money over time on heating and cooling bills.
Building Your Own House: Pros And Cons
Building your own home allows you to build it according to your own specifications and features that are ideal for you. However, it is crucial to assess if you have the time and resources to handle the stress of overseeing a construction project from start to finish.
Pros of building a home:
- Quality and durability. New constructions must meet the latest building codes, so you know your house is safe.
- Customizability. You have complete control over the design, materials, and features of your ideal custom home to reflect your lifestyle and taste.
- Personalized Design. You can meet the exact needs of your family and make sure that it feels just right. Your floor plan will likely be more responsive to your needs than an older home could be.
- Location. Building from scratch allows you to choose the best location for your home, even if it’s not in an area with pre-existing homes.
- Energy efficiency. New structures are more energy-efficient than older homes. Plus, you don’t have to worry about whether or not it’s been properly maintained or if it has any lurking problems that could cost you dearly later on.
Cons of building a home:
- Bigger responsibilities. Building a home is a major undertaking and will demand more hands-on effort. Unexpected things come up during the home building process.
- Longer process. The process of custom home building takes meticulous planning and commitment. Plus, construction delays can be financially draining.
- Expensive landscaping. Adding and designing a new landscape can be very expensive and you will have to wait for your grass and flowers to grow.
- Preparing the land can be costly. You will need to clear and prepare land for construction, as well as have major systems and utilities such as water, gas, and electricity installed.
- Unexpected cost. Expenses are often underestimated and changes made on the fly can make the project cost even more.
Consider your options carefully and determine whether building or buying would be the best choice for you and your family. Consult real estate agents and local custom home builders to get informed cost estimates.
Key Factors Affecting Cost Estimates
When calculating the cost to build a house, there are numerous factors that you need to take into consideration. This is because project costs are constantly changing, whether it is due to the beginning or end of the project, tangible or intangible changes in the project scope and site conditions, additional drawings, or changes from modifications. Understanding these factors will help you create better cost estimates as you consider building your own home or deciding to build one yourself.
Size of the home. The price of the home is directly related to its size. The typical cost of a larger house is higher than a single-family home.
Additional stories. As the number of stories increases, so does design, materials and construction work.
Customization and shape. The design complexity of a custom home can also increase costs. For example, if you plan to build a house with many corners and higher quality finishes it will cost more.
Design features. Installation of nice-to-have valuable features can also increase both construction costs and maintenance expenses.
Average Cost to Build Your Own House
HomeAdvisor’s latest cost guide estimates that the national average cost to build a house in 2022 is $256,000. The price you will ultimately pay varies greatly—taking into consideration a number of factors. These include land and materials, the geographic location of the property, the size and footprint of the house, the quality of the finishes and products you select, and many other factors. High-end, urban homes can run $820,000+ while low-end homes can cost $8,000.
Construction Cost per Square Foot
A key factor in a home’s cost is its size, expressed per square foot. HomeAdvisor’s average cost of new home construction ranges from $100 to $200 per square foot, but it can cost 200% higher per square foot for customized and high-end options. Your preferences and choices will affect the cost of your new home. Here’s a breakdown showing current housing prices for popular home sizes in metropolitan areas.
|Size (Square Foot)||Average Range|
|800||$80,000 – $160,000|
|900||$90,000 – $180,000|
|1,000||$100,000 – $200,000|
|1,200||$120,000 – $240,000|
|1,500||$150,000 – $300,000|
|1,600||$160,000 – $320,000|
|1,800||$180,000 – $360,000|
|2,000||$200,000 – $400,000|
|2,500||$250,000 – $500,000|
|2,700||$270,000 – $540,000|
|3,000||$300,000 – $600,000|
|4,000||$400,000 – $800,000|
|5,000||$500,000 – $1,000,000|
There are several methods to save money while developing a home, and in this article, we’ve compiled a list of ten ideas on how to build your house for less.
House Building Cost Breakdown
The overview of the cost breakdown can be broken down into labor, building materials, and administration which includes design, cost-to-build estimates, house plans, and building permits.
The final and actual cost to build will vary with every project. These figures are intended to give you a general idea of the cost to build a house and get you thinking about what can be done to minimize costs and increase the quality of your house.
Pre-construction cost is the price that you need to pay before the construction of any project takes place. This price covers the cost of the land, consultation fees, architectural and engineering fees, development charges, and many more expenses. One thing to remember is that the cost of pre-construction may vary greatly from one project to another depending on a particular location.
1. House Plans and Cost Estimates
Choosing the right design and construction team is vital to the process of creating an ideal and accurate house plan and cost-to-build estimates. House plans range from $2,000 to $8,000. Most house-building companies provide online search tools to narrow the thousands of plans they offer into a handful that best matches your needs.
2. Land Prep
The cost of purchasing a lot is based on several factors, including the size of the lot, location, accessibility, physical attributes, demand and supply, and the prevailing prices in the area. Generally, the cost of a lot varies in the range of $3,000 to $150,000.
Developed lots situated in an urban setting tend to cost higher. An underdeveloped lot, mostly in rural areas, will typically not have utility, sewer, or cable lines. Below are the estimated costs for connecting utilities to the site for use.
Electric grid: $1,000-$30,000.
Water lines: $1,000-$5,000.
Additionally, to clear and prep land for construction, you will incur costs for soil tests, land excavation, grading, and land surveys.
Average cost range:
Soil test: $800–$2,100
Land excavation and grading:$1,500–$5,300
Land surveyor: $400–$700
3. Building Permits
To legally begin your house construction, you need to secure a building permit. The cost of this building permit could range from $1,200 and $2,00 depending on your location and the extent of requirements required by the issuing office.
The cost of labor is usually one of the biggest expenses of any construction project. It accounts for 30% to 60% of your total project costs, but there are several factors that can affect the cost of labor for building a house. These include the size and design complexity of the home being built. To give you a better idea of what you might pay, below are the average costs of specific components of construction labor.
Construction Manager average cost range: $3,150-$50,000
Framer cost per square foot: $7-$16
Electrician rates per hour: $50-$100
Plumber and major systems installer rates per hour: $45-$200
Roofing average cost range: $5,000-$10,000
Building Materials Costs
About 50% of your total home building project costs are for materials. The quality and type of materials you select will affect the cost. It pays to do careful research on the factors that affect and make up the price of construction materials to save on cost and get value for money.
Lumber – total average $25,000 – $65,000
Concrete – total average $1,000 – $10,000
Drywall – per sheet $10
Flooring – per square foot $1 – $5
Siding – per square foot $2 – $15
Insulation – per square foot $0.10 – $1
Roofing – total average $1,000 – $3,000
The foundation, which includes excavation, form setting, pouring, and backfilling, is the solid base and one of the most important areas of your home building process that is always worth the investment.
The foundation costs depend on its complexity and depth as well as the type and size of the house.
In general, you can expect to pay between $4,000 to $25,000 for a new foundation. However, if you’re building in an area with poor soil or heavy rainfall, the cost can be higher. If your area is subject to cold winters and hot summers, you’ll also have to pay for insulated foundations to prevent your home from freezing.
Below are some factors that impact the cost of building a foundation:
Size of the house. The larger your home’s footprint, the more material and labor it will take to finish your foundation.
Foundation type. A basement is more expensive than a crawlspace or slab because it requires more material and labor costs to build the walls and waterproof them properly.
Building site. The land surrounding your home can impact how much it costs you to build your foundation. If you need to excavate uneven ground or transport dirt offsite during construction, these costs will eat into your house building budget.
Framers determine the size and location of rooms, roofing, and other important features by installing the frame and trusses. They also install sheathing, subfloors, windows, and doors. The cost of framing ranges from $20,000 to $50,000.
Electrical Plumbing and HVAC Systems
Labor-intensive major system costs such as installations of electrical, plumbing, and HVAC systems cost between $30,000 to $75,000. Each area requires a high volume of work and is crucial to the safety and durability of your home. There are factors that affect the cost of this system installation including size and type of system.
Rough-in plumbing costs: $7,000-$15,000
Electrical wiring average: $20,000-$30,000
HVAC average costs: $1,500-$13,000
Solar panels and system installation costs: $18,000-$35,000
Exterior Home Finishing Costs
The exterior finishes account for a large portion of your home’s curb appeal. But more than the decorative element and appearance, it’s part of your home’s weatherproofing.
Hiring a professional to handle exterior finishes is recommended because it requires experience and specific tools that are best left in the hands of experienced local custom home builders.
The overall cost of exterior finishing typically runs from $40,000 to $60,000, which will obviously depend on what type of material and finishes you choose, but it’s important to note that labor costs may have a bigger impact on your budget compared to other projects.
Roofing installation prices: $5,600-$11,500
Windows cost: $3,000-$9,300
Exterior painting: $1,800-$4,400
Interior Home Finishing Costs
The interior finishes of your home are worth your attention because this is what makes a house a home. The cost of your interior design greatly depends on your budget and the decorating style you have in mind.
A budget of $30,000 to $50,000 will get you a basic aesthetic. Anything higher than that can get you more upscale finishes, custom-made cabinets, and other sophisticated changes.
Tips to manage the cost of your interior finishes
There are many choices and options, and it’s easy to be overwhelmed. But there are ways to make the right choices for both your budget and your home’s style.
- Plan ahead and do your homework
- Determine your priorities
- Be realistic with your budget
- Work with professional interior designers
- Know your preferences before you start purchasing
- Seek advice on products from home professionals
- Use Pinterest for interior finishes inspiration and ideas
- Be open-minded about what’s possible
How to Avoid Unexpected Expenses
With so many decisions to make and so much to keep track of, it’s easy for homeowners to make mistakes that lead to unnecessary expenses or construction delays. But you can prepare for them. Here are some tips to control costs, save money, and minimize the impact of surprises during and after the building process.
- Choose value-for-money. Opting for low-priced materials will lead you to spend more money and time on repairs, which might end up being more expensive than using the right building materials. Durability and quality should be your main consideration when choosing materials. The cost may be higher but they will serve you longer and better.
- Work with a reputable home builder. Hiring an experienced, professional contractor will cost considerably more than hiring a general contractor to oversee all phases of construction, but it’s a lot cheaper than having to replace parts or fix botched work.
- Specify all details in writing. The more details you can get in writing, the better. The more you can plan ahead and make sure that everyone involved in the project is on the same page, the fewer surprises you’re likely to encounter.
- Know the difference between fixed and variable expenses. Fixed costs are expenses that remain the same regardless of how much or little you produce, such as mortgage payments or insurance. Variable costs are expenses that change in relation to how much you produce. For example, when you’re building a house, it’s easy to add an extra room or two if it’s not too much trouble for the contractor. The cost of labor and materials might increase slightly, but not by a lot — so it can be worth it to build out more square footage in order to get exactly what you want rather than choosing from existing floor plans that might not quite meet your needs.
- Be careful what you include in your contract. It is incredibly important to have a lawyer review your construction contract before you sign it to avoid common pitfalls that can occur.
The first thing to remember is that everything in the contract should be exactly what you wanted and discussed with the contractor. If something is not specifically included, then it is not going to be done, and you will have no recourse against the contractor for failing to include it.
- Hire a home inspector before closing. The home builders are responsible for completing the checklist of items that need to be fixed before closing. But in some cases, the builder may not be able to complete all the necessary tasks on time. This can result in unnecessary expenses or even a delay in closing. Hiring a home inspector can help ensure that your new home is ready for move-in day.
- Create a contingency plan for unexpected circumstances. The best way to avoid unexpected expenses is to be prepared for them. Remember, no matter how realistic the numbers are, there will still be unexpected expenses when building a new home.
Overall, building a home or a house can be an overwhelming process. There is more to the process, and knowing what goes into the cost of building a house can help you better understand home building costs and know exactly what you are getting into. The more you know about what to expect, the easier and more fulfilling it will be. Careful planning and partnering with professional home builders will help you build realistic cost estimates, make qualified decisions on how much to allot for building a house, rule out unnecessary expensive options along the way, and achieve the expected quality of your dream home.