Perhaps you can’t find a home that has the unique floor plan, space, and features you want. Or perhaps you know the neighborhood you want to live in, but nothing there fits your specifications. Or maybe you have a plot of land with nothing on it. In all these circumstances, you might consider building your dream home instead of buying an existing house.
This is an exciting prospect, but there are also many unknowns. Who will design it? Who should you hire to build it? And perhaps most importantly, how much will it cost?
The Average Cost to Build a House
Any time you ask for a broad average like this, there will be variation depending on the source of the data, who they surveyed, and how many people responded. However, here are some rough, trustworthy estimates. To build a new single family home in the U.S., the average price tag is…
- $311,455, according to HomeAdvisor’s 2020 estimates
- $296,652, according to the National Association of Home Builders (NAHB) 2020 study
- $281,700 (median contract price), according to the U.S. Census Bureau’s 2019 data
Unfortunately, this average figure alone doesn’t tell you much. Home building costs vary widely depending on a number of factors, the most significant of which is location. The typical range, according to HomeAdvisor, is between $163,333 and $483,868, which is a fairly large gap. Even figuring costs by square footage, new construction can vary between $100 and $200 a square foot. Customized and luxury homes will cost even more—usually between $200 and $500 per square foot.
Although you’ll want to do your own research into the specific location of your choosing, we’ll break down a few of the major costs for you to show you the kinds of items to keep in mind.
As with all home costs, building costs will vary significantly by location. The Census Bureau divides the U.S. into four regions and breaks down the median contract price for each region as of 2019. Here are those prices, plus the total costs when multiplied by the average size of a newly constructed house (2,322 sq. ft.).
- Northeast: $155.68 per sq. ft. ($361,488.96)
- South: $110.19 per sq. ft. ($255,861.18)
- Midwest: $129.01 per sq. ft. ($299,561.22)
- West: $158.73 per sq. ft. ($368,571.06)
- Entire country: $126.15 per sq. ft. ($292,920.30)
Of course, these regions cover a lot of ground. For example, building a new home in Los Angeles will likely cost a great deal more than in suburban Tacoma, Washington. If you happen to live in high-priced areas such as Los Angeles, you can use services such as Greatbuildz to find contractors who may offer flexible pricing.
The House Itself
When it comes to the house itself, there are a few main costs to consider: foundation, framing, exterior work, and major systems. You also need to factor in land and site work for your plot. Here’s how those costs break down from two different data sources.
- Land and site work: building permits, impact fees, inspections, engineering/architectural planning
- HomeAdvisor: $5,000-$38,000 (3-8% of total costs)
- NAHB: $18,300 (6% of total costs)
- Foundation: excavation, pouring concrete, retaining walls, backfill
- HomeAdvisor: $16,600-$72,000 (10-15%)
- NAHB: $34,900 (12%)
- Framing: framing, roof frame, trusses, sheathing
- HomeAdvisor: $16,600-$95,000 (10-20%)
- NAHB: $51,500 (17.5%)
- Major systems: HVAC, electricity, plumbing
- HomeAdvisor: $17,000-$72,000 (10-15%)
- NAHB: $43,700 (15%)
Exterior and Interior Finishes
Once the basic frame of the house is built and installed with important systems, you have the finishings to think about, both inside and outside the home. Together, these finishings comprise anywhere from 40-55% of the total building costs of a new home, so these costs add up quickly. Exterior finishes include wall finishings, roofing, windows, doors, and more. According to HomeAdvisor, these costs ranged between $20,000 and $95,000, though the NAHB put the average figure at $41,700.
Interior finishes include structural components like insulation and drywall but also aesthetic touches like interior trims, painting, lighting, flooring, and mirrors. There are also functional components like cabinets, countertops, appliances, plumbing fixtures, and fireplaces. These costs can vary widely depending on the brands you pick, so HomeAdvisor shows a range of $42,000 to $167,000, and the NAHB shows an average of $75,000.
The cost of the lot on which you’ll build your own home is not included in the figures we’ve provided so far. According to the NAHB, the average land cost in 2020 was about $90,000 for 22,000 square feet of land. That’s about half an acre. However, the Census Bureau finds a much smaller average lot size for new constructions: 9,000 sq. ft. If the land is unfinished, lacking sewer and electricity connections, this will add costs to construction.
However, even if you already own finished land, chances are you’ll want to make some improvements to the lot before you move in. Landscaping, outdoor structures, and driveways contribute around $20,000 to the total cost, according to the NAHB.
Building vs. Buying
Here’s the big question that looms large in the mind of prospective home builders: Will I save money by building my own home? The answer is, unhelpfully, a resounding “maybe.” In 2019, according to the Census Bureau, the average cost to buy a single-family home was $383,900. Clearly, that’s substantially more than the $280,000 to $310,000 average for building a home, but these prices aren’t as straightforward as they might appear. Here, we’ll break down the financial pros and cons of buying an existing home vs. building your own.
Advantages of Building
Customization comes with many advantages, including the fact that you’ll only pay for what you want. An existing home in the right neighborhood might come with premium features that you don’t care about, like a finished basement or a swimming pool, but that ffactor largely in the purchase price. Additionally, when you build to your own specifications, you won’t need to think about paying for renovations when you move in.
Building new also means new appliances and systems, which means everything is still under warranty when you move in. You won’t have to figure high maintenance costs into your budget for several years to come. New heating equipment and building materials are also substantially more energy efficient, saving you heating and cooling costs.
Advantages of Buying
For many people, buying an existing home may be worth it just for the reduced hassle, but it has financial benefits as well. Perhaps most notably, land and landscaping are included. Yes, the NAHB reported the average building cost to be $296,652, but that’s not including the $89,540 for a finished lot, bringing the total price for new construction to $386,192—comparable to the price of buying an existing home.
Additionally, existing homes come with mature landscaping, including trees and other greenery that can save you quite a bit on air conditioning costs if you live somewhere warm. Finally, when you buy a home, you have context for the sale price of the house. You can see whether it has appreciated or depreciated in value over time to help you predict the value it will have in the future. With new home construction, you have to hope your location and design choices aren’t part of a short-lived fad.
Clearly, there’s a lot to take into account when deciding whether to build your own home. However, there’s plenty of information out there, including real estate calculators that can give you a more specific estimate of cost-per-square-foot to build in individual zip codes. A little bit of research can give you a better picture of what you’re committing to financially.
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