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How Much Does it Cost to Build a House?

Couple talks to builder of their new home
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Finding an existing home that checks all the boxes and fits your budget can be a huge challenge. If your house hunt has been unsuccessful so far, you may be wondering, how much does it cost to build a home? Building a house allows you to customize the floor plan and finishes, so you get everything on your wishlist — but it comes at a price. The average cost to build a house is about $300,000, which is nearly $100,000 more than the median home value in the United States.

This guide will help you understand all the costs involved in building a home so you can figure out if it’s the best path for you.

Building a house: The cost breakdown

If you’re interested in building a house but aren’t sure what it might cost, here’s a full breakdown of average construction expenses for new homes.

The cost of your lot depends on where you live:

The average cost of land in the United States is $3,160 per acre. But depending on where you live, you may have to pay much more for your lot. Land in urban areas costs $511,000 per acre on average and can go for even more in the most expensive cities. An acre in New York City costs a whopping $26 million while an acre in San Francisco costs $20 million. Although you probably won’t be buying that much land (the average home is only on a fifth of an acre), purchasing a lot in a city still won’t be cheap.

Choosing a location with a lower cost of living can greatly reduce the cost of building a house in a given area. If you’re on a tight budget, you can save money by purchasing a lot in a more rural area where land goes for just a few hundred dollars an acre. Nevada has the cheapest land at just $570 per acre, and Wyoming is a close second at $740 per acre.

The average cost to build a house:

According to the National Association of Home Builders, the average total cost of construction for a single-family home is about $300,000:

In 2019, the NAHB conducted a study on the average cost of building a single-family home by surveying builders around the country. The data showed that new homes cost about $300,000 to build, not including the price of land. The chart below gives a detailed breakdown of what you can expect to pay to build your new home. However, keep in mind that the cost of labor and materials varies depending on where you live, which may make your build more expensive.

Component Average construction cost in 2019
Site Work (fees, inspections, etc.) $18,323
Foundation $34,850
Framing $51,589
Exterior Finishes $41,690
Major Systems $43,668
Interior Finishes $75,259
Final Touches (landscaping, driveway, outdoor structures like a patio) $20,116
Other $11,156
Total $296,652

*Data from the 2019 NAHB Cost of Constructing a Home Survey

Make sure to calculate labor costs:

On average, construction costs like labor and materials make up 61% of the total build price of new homes. So if you have a budget of $300,000, about $183,000 of it will go toward labor costs. However, if you live in an expensive city, you may have to pay more for labor. So to get an accurate idea of how much labor will cost in your area, make sure to get quotes from local builders.

Don’t forget to factor in additional costs:

Many people forget to factor in site preparation costs that occur before construction begins. Things like soil tests, driveway permits, and tree removal can slip under the radar and lead to surprise bills later, so make sure to include a line item for them in your budget.

The cost of home accessories (like window treatments, towel rods, toilet paper holders, and mirrors) isn’t usually included in quotes from builders either. It’s wise to set aside some money for all the little things you’ll need to buy before you can move into your new home.

Ask yourself, “Can I afford to build a house?”

Whether or not you can afford to build a house depends on what type of home you want and where you live. If you want a completely custom home near the city, you’ll end up paying a lot for it. But if you’re building a semi-custom home in a development in the suburbs, you won’t need as big of a budget. The square footage you want your new home to have will also affect the cost. The bigger the home, the more expensive it is to construct.

To figure out if you can afford to build the type of home you want, get prequalified for a new construction loan. Once you know how much you’re qualified to borrow, you can approach builders for estimates and see which floor plans and upgrades are within your budget. You may need to adjust your expectations and make some compromises to keep the project in your price range.

The bottom line

Building a home costs $300,000 on average, not including the price of the land. If you’re building in a major city, a lot could end up costing you $100,000 or more, which will increase the cost of your construction project significantly. You could also end up paying much more for labor if you live in an urban area. To figure out if you can afford to build a home, make sure to get quotes from local builders who know what labor, materials, and land cost in your area.

Frequently asked questions

How can I save money when building a house? 

You can save money on your home build by opting for a smaller floor plan, purchasing a cheaper lot, and shopping around to find the most affordable builder.

How do I estimate the cost of building a house? 

On average, it costs about $187 per square foot to build a home, including the price of the lot. To get a rough idea of how much your construction project will cost, multiply $187 by the number of square feet you’d like your new home to have. However, costs vary widely by location, so it’s best to find out the average cost per square footage in your area.

Is it cheaper to buy or build a house? 

In general, it’s cheaper to buy a home. Purchasing an existing home costs about $123 per square foot, whereas building a house costs an average of $187 per square foot.

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