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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?
Homebuyers spend an average of $297,139 building a single-family home, according to HomeAdvisor. But the materials you use, labor costs in your area, and customization choices will influence your final price tag.
Most homeowners spend between $153,570 and $477,534 on building a new single-family home, or $100 to $200 per square foot.
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 build a new house. Here’s what the nationwide averages look like as of April 2021 when it comes to building and buying a home:
- Building a home: $297,139
- Buying a home: $435,50011
You’ll need to compare the cost of buying a home in your area to the cost of building the home you want.
If you decide to buy a home, another thing you’ll want to do is shop around for a good mortgage rate. Credible allows you to easily compare mortgage rates from our partner lenders without leaving our platform.
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.
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. Most new homes in 2019 measured between 2,500 and 2,700 square feet, according to HomeAdvisor.
Here’s what you might pay to build a home based on square footage:
|Square footage||Price range|
|1,000||$100,000 to $200,000|
|1,500||$150,000 to $300,000|
|2,000||$200,000 to $400,000|
|2,500||$250,000 to $500,000|
|3,000||$300,000 to $600,000|
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 are some examples of how home costs vary from city to city:
|Square footage||Price range to build a home|
|Austin, Texas||$300,000 to $475,000|
|Denver||$275,000 to $550,000|
|Los Angeles||$150,000 to $500,000|
|New York City||$175,000 to $550,000|
|Washington, D.C.||$200,000 to $575,000|
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.
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.|