How Much Does It Cost To Build a House?

Breaking Down the Major Costs of Building a House

Workers install roof on rural home under construction
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Andy Sacks / Getty Images

Building a home from the ground up is a big undertaking. Prices can vary widely, but learning about the average costs in homebuilding can help you more successfully plan your own budget for a fully customized home.

If you’re buying a new spec home from a builder or developer, you may be able to choose some of the details like flooring, appliances, and paint color. The earlier you secure a contract in the process, the more customization you may have. With tract homes, where the developer divides a large tract of land into lots, you will likely have even less say in the homes' features.

Ultimately, to get a home built completely to your standards, you’ll need a fully customized home where you have complete control. With this route, you have to consider many details that can affect the cost, including the design, the materials, and much more.

Key Takeaways

  • The cost of building a new home ranges widely depending on location, home size, and the customizations that you choose.
  • The foundation, frame, roof, and interior finishes are among the major expenses associated with building a new home.
  • Working with a reputable contractor who can review all your options along the way can help save you money.

The Cost of a New Home

With so many factors that go into building a home, including labor and location, the total cost can vary widely. But you should consider several common expenses.

In 2019, the average construction cost of a typical single-family home was $296,652, or about $114 per square foot, accounting for roughly 61% of the total sales price, according to a survey by the National Association of Home Builders.

Within the construction cost, the major expenses are the labor and materials. Ben Neely, owner/president of Riverbend Homes, a boutique custom homebuilder in the Texas Hill Country area, calls these costs the “sticks and bricks.”

He cites a home’s foundation, frame, and roof among the major cost-drivers. Interior finishes, like flooring and drywall, also account for a significant expense in new-home construction.

Common home construction costs can be broken down into these major categories (listed here along with their average percentage of total cost):

  • Interior finishes (25.4% of total cost): drywall, flooring, painting, cabinets, countertops, appliances, plumbing fixtures, insulation
  • Framing (17.4­­%): framing, trusses, sheathing
  • Major system rough-ins (14.7%): plumbing, HVAC, electrical
  • Exterior finishes (14.1%): roofing, windows, doors, exterior walls
  • Foundations (11.8%): excavation, foundation, concrete, retaining wall, backfill
  • Final steps (6.8%): landscaping, outdoor structures, driveway, cleanup
  • Site work (6.2%): permits, architect and engineer fees, water and sewer fees, impact fees
  • Miscellaneous (3.8%): pool, fencing

Keep in mind that these estimates are based on national averages and that your location plays a key role in exact costs.

“Hire an experienced general contractor to help guide you through the process,” Neely told The Balance in an email. “There are many moving parts to building a house, and you really need someone with experience managing the process and to help build a budget for your project.”

The Biggest New Home Costs

Let’s take a closer look at these common expenses and other major factors that can affect the total cost of a custom home. That way, you can prepare a budget for each phase of building, from buying land to adding the final coat of paint.

Square Footage

The larger your home, the more expensive it will be to build. Just how much more expensive depends on several factors, including the specific materials and customized features.

“Generally speaking, you can expect to build a house anywhere from $120 per square foot to $400 per foot,” Bill Samuel, owner of Blue Ladder Development near Chicago told The Balance in an email.

Geographic location also plays a big role in the cost per square foot. High-end homes in more expensive markets like San Francisco or New York, for example, can cost more than $400 or $500 per square foot.

Home Size Average price range ($120 - $400 per square foot) 
1,000 square foot $120,000 - $400,000
2,000 square foot $240,000 - $800,000
3,000 square foot $360,000 - $1,200,000

Labor

During the home build, you’ll be hiring a number of different professionals. Arguably the most important will be your general contractor, who will oversee the entire process from start to finish.

Typically, a general contractor will charge an upfront fee of 10% to 20% of the total project cost. So, if the cost to build your new home was $450,000, a general contractor would probably charge between $45,000 to $90,000.

Other professionals you’ll typically need to hire and their average rates include:

  • Electrician: $50 to $100 per hour
  • Plumber: $45 to $200 per hour
  • Roofer: $5,000 to $10,000
  • Landscape architect: $70 to $150 per hour
  • Exterior painter: $1,800 to $4,400
  • Architect: 5% to 20% of total project cost
  • Structural engineer: $100 to $200 per hour

Materials

The cost to build a house can fluctuate based on the price of materials. Here are some rough estimates:

  • Lumber: $25,000 to $65,000 
  • Concrete: $1,000 to $10,000
  • Roofing material: $1,000 to $3,000
  • Drywall: $15 per sheet
  • Insulation: Up to $1 per square foot
  • Siding: $2 to $15 per square foot
  • Flooring: $1 to $5 per square foot
  • Lighting Fixtures: $2,000 to $12,000
  • Cabinets (with installation): Up to $30,000
  • Paint/painting: $4,000 to $11,000
  • Appliances: $3,000 to $15,000

Lumber prices play a key role in the total cost of building a new home. Recently, lumber prices have risen rapidly, adding significantly more cost to building a new home in 2021.

Optional items include:

  • Deck: $16,800 to $22,400
  • Fencing: $1,500 to $3,000
  • Inground pool: $28,000 to $55,000
  • Finished basement: $18,395 on average

Location and Land

In addition to the home itself, the lot or land that you purchase can also have a big impact on the overall cost.

Lot costs vary widely, anywhere from about $3,000 to $150,000 per lot. Ultimately, the cost depends on an array of factors, including size, location, and whether or not the lot is finished. (The median lot size for a new single-family detached home sold in 2019 was 8,177 square feet, which is 0.188 of an acre.)

You may have additional land-associated costs if you need to clear the land, excavate, or run lines to utilities.

Don’t forget to factor in the holding costs, or carrying costs, during your home build. They include financing and mortgage payments, property taxes, builders’ risk insurance, and utility expenses.

Ways To Save on New Home Construction

When you’re building a fully custom home, some key decisions you make can keep the costs down. Here are some strategies to consider:

Buy a flat piece of land. “If you have a heavily sloped lot that requires a lot of excavation work, your budget will quickly explode,” says Samuel. Likewise, digging down to add a basement will add to the cost of your foundation.

Use a finished lot if possible. If you’re building on an unfinished lot that doesn’t have access to city grids, waterlines, and sewers, this can increase your price by tens of thousands.

Work with your contractor to go over material options and prices. Making wise choices with materials can save you money. For example, choosing a composite shingle roof instead of a metal roof can save you “a large chunk of money,” Neely said.

Compare the price of building a two-story home versus a one-story. With a smaller footprint of a two-story home, you won’t need as much land. However, construction costs are often higher for building up versus building out. Crunch the numbers for your options.

Keep it simple. Complex or luxury architecture and design features can drive your costs higher. Odd-shaped rooms that do not fit standard-sized appliances also add to total costs.

Use your DIY chops. If you have the skills to hang your own cabinets, lay flooring, paint, or do the landscaping, then you could save a significant amount of money by doing that labor yourself.

Then, consult with a general contractor in your area to get a better understanding of the specific costs of making your dream custom home a reality. An industry professional can also recommend specific ways to cut costs or improve the quality of your building plans. 

Frequently Asked Questions (FAQs)

Is it cheaper to build or buy a house?

Generally, building a fully custom home is more expensive than buying an existing home. However, a new home that has materials made from modern technology may have features that can save a homeowner money from maintenance costs in the long run.

What’s the average cost of building a house?

The average cost to build a new home is about $120 to $400 per square foot, with exact prices depending on location, materials, design, and other factors. New home construction costs averaged $296,652 in 2019, which was around 61% of the total sales price.

How long will it take to build a new home?

Traditionally, homes have taken about six months to build. Supply chain disruptions and labor shortages can bring it to almost a year, factoring in customizations.

“A good rule of thumb is to anticipate about one month of construction for every 350 square foot of living area,” said Ben Neely, owner/president of Riverbend Homes. “So a 3,500-square-foot home should take about 10 months to complete.”