How Much Does It Cost To Build A House?

There are an endless number of considerations to make when buying a house. In a seller’s market in particular, buyers can easily become frustrated with the stiff competition or if the available inventory doesn’t exactly align with what they had in mind for their dream home. These frustrations can even leave buyers wondering if they should buy a home in the first place.

If these frustrations sound familiar, then having a new home built may be a better option for your situation. Building your own home means you have full control over every aspect that goes into it, but that freedom isn’t free. How much does it cost to build a house?

According to HomeAdvisor.com, the average cost to build a house is somewhere between $117,791 and $489,106, with a national average of $499,962. The average cost per square foot is approximately $150. However, the cost to build a home will depend on square footage, location, economic factors and more. Keep reading for an in-depth look at building costs.

A Breakdown Of The Average Costs To Build A House

Here are some breakdown costs for building a house:

Land

To build a house, you’ll first have to purchase a vacant lot to put it on. The cost of buying land to build a house can vary depending on several factors, including the location of the land, the size of the land and the type of land. One of the most important factors to consider when buying land to build a house is the location of the land. In general, however, the cost of land has been increasing in recent years, making it more expensive to buy land to build a house.

Site Work

Site work is the preparation of a building site for construction. It can include a variety of tasks, such as clearing and grading the land, removing debris, installing utilities and building roads and driveways. The cost of site work can vary depending on several factors, including the size and complexity of the project, the location of the site and the availability of labor and materials.

Your land will likely need to be prepared to build on. To get an estimate of how much this will cost you, find out what services you’ll need. Then, do some research and get quotes for the land you plan to build on.

Floor Plans

If you have an idea of certain elements that you want but aren’t quite sure how to put it all together, or if you’re planning on building a large or complex home, it may make sense to hire an architect to help you create a blueprint for your future home.

The cost of hiring an architect to design a floor plan can vary depending on several factors, including the size and complexity of the project, the architect's experience and reputation and the location of the project. In general, however, architects typically charge between 5% – 20% of the total cost of the construction project.

Foundation

The cost of building a foundation can vary depending on several factors, including the type of foundation, the size of the house and the location of the build. In general, the foundation is one of the most expensive parts of building a house, accounting for about 10% – 15% of the total cost.

Three of the most common types of home foundations are concrete slab, crawl space and basement foundations. Slab tends to be the cheapest option, followed by crawl space and then basement.

The size of the house also affects the cost of the foundation. A larger house will require a larger foundation, which will be more expensive. The location of the build can also affect the cost of the foundation. In areas with difficult soil conditions, such as rocky or sandy soil, the foundation will be more expensive to build.

Framing

Once the foundation is built, the framing crew will come in and start constructing the skeleton – or “the bones” – of your house.

The cost of framing a house is a significant factor in the overall cost of construction. Framing is the process of building the skeleton of a house, and it includes the walls, roof and floors. The cost of framing can vary depending on several factors, including the size of the house, the materials used and the complexity of the design.

Exterior Finishes

Now, your team is going to start making the plain-looking wooden structure look like a home. This means adding siding, a roof, windows and doors. Exterior finishes can account for $40,000 – $75,000 of the overall cost of building a house. 

Major Systems

While your house may be starting to look like what you envisioned from the outside, there is still work to do. At this stage, your home builder will be working to get your house humming with air, electricity and plumbing.

The cost of an HVAC system can vary from $1,500 – $13,000. The average cost is around $8,000, including parts and labor. HVAC contractors typically charge between $3 – $6 per square foot of your home to install a central air system. For example, replacing an HVAC system for a 2,000 square foot house costs $6,000 – $12,000. 

An electrician will wire your home and get you connected to power. This can cost $20,000 – $30,000. Costs for plumbing installation can range between $7,000 – $15,000.

Interior Finishes

Interior finishes are like the icing on the cake; they cover up all the stuff happening within the walls (like plumbing, electrical, HVAC) and make it look professionally polished. This includes the less fun but necessary aspects of your home’s interior, such as insulation and drywall, as well as all the fun elements you’ve most likely been looking forward to picking out, including paint, flooring, countertops and cabinetry.

They can make up a significant portion of the cost of building a house, ranging from 25% – 50% of the total budget. The cost of interior finishes can vary depending on several factors, including the type of materials used, the quality of the materials and the size of the house.

Additional Or Optional Costs

That’s a basic rundown of all the essential hard costs you can expect to pay for when building a home, but there are plenty of other additions you can make, if your wallet can handle them. 

Here are some additional or optional costs of building a house:      

• Building permits: You will need to obtain a building permit from your local government before you can start construction. The cost of a building permit varies depending on the size and complexity of your project.
• Landscaping: The cost of landscaping can vary depending on the size of your lot, the type of plants you want to install and the amount of work that needs to be done.
• Driveway: Driveway costs can vary depending on the length and width of the driveway, the type of material you want to use and the amount of work that needs to be done.
• Deck: The cost of a deck varies depending on the size and complexity of the deck, the type of material you want to use and the amount of work that needs to be done.

Average Cost To Build A House By Square Footage

Here is the average cost to build a house by square footage:

Average Cost To Build A House By State

This table shows the average cost to build a house in each U.S. state:

When Is The Cost To Build A House Worth It?

Here are some situations that could make the costs of building a dream home worth it:

• When you have the budget: You want to create a home that is truly unique and reflects your personal style. Purchasing a home requires you to make a lot of compromises in terms of aesthetics, location, floor plan and more. When you build a house, you can make all those decisions for yourself and get exactly what you want.
• When you want to avoid home repairs: Everything is new. New construction homes have brand new appliances, fixtures and other components, which means they will likely last longer than what would come in a home that’s already been lived in.
• When you’re not in a rush to move: Are you trying to figure out how long it takes to build a house? In the United States, the average time was 7.2 months in 2021, but that number can vary widely when you consider the type of house. For a tract or spec house, that time is around 6.5 months, and for a custom house, it averages just over 12 months.
• When the cost to build is less than home prices in your area: In general, building a new home does cost more than buying an existing one. However, a 2023 study found that new construction costs are less than a comparable preexisting home in 18 states.
• When the resale value exceeds the cost to build: The resale value of a house can exceed the cost to build in some situations. For example, in areas with high demand, home prices can be bid up above the cost of construction.

When The Cost To Build A House Isn’t Worth It

Here are some situations that could make building a new home not worth the cost:

• When the cost to build is beyond your budget: Building a new home can be expensive, and it's important to make sure that you can afford the construction costs, as well as the ongoing costs of owning a home, such as property taxes, insurance and maintenance. If the cost to build is beyond your budget, it may be better to consider buying an existing home.
• When building and material costs are high: High building material costs can lead to a permanent shift in prices. 
• When you want to move soon: Building a new home can take a long time, from planning and permits to construction and move-in. If you need to move quickly, it may be better to buy an existing home that is already move-in ready.
• When building costs are higher than home prices in your area: Building in a popular area can also be more expensive. This is because there is more demand for labor.
• When you do not want to make a lot of decisions: Building requires a lot of decision making. You’ll need to make lots of decisions during the home building process, which some people find stressful.

Tips For Managing The Cost To Build A Home

Here are some tips for managing the cost to build a home:

Consider A Construction Loan

New construction homes can’t be financed with traditional types of home loans. Future homeowners should consider a construction loan. New construction loan rates are higher due to risk but can be renegotiated when it shifts to a permanent mortgage.

Purchase Land That’s Already Developed

There are several financial benefits to purchasing developed land, including lower interest rates, no mortgage payments, no property insurance, no maintenance and long-term appreciation.

Buy A Prefabricated Home

Purchasing a prefab home can have several financial benefits, including cost savings, less waste, less time to build, lower interest rates and tax breaks.  

Use A Preestablished Floor Plan

Using a preestablished floor plan can be less expensive than using an architect’s custom design. House plans can cost as little as $500 and up to $5,000. Floor plans can also help you determine your final budget, which can help you decide on building materials, finishes, appliances and furniture.

FAQs About How Much It Costs To Build A House

Here are some frequently asked questions about how much it costs to build a house.

Is it cheaper to buy or build a house?

When deciding if building or buying a house is for you, it is important to understand that the cost to build can vary widely depending on location, property type, labor expenses and material costs. In general, it's cheaper to buy a house than to build one. 

What’s the cheapest type of house to build?

As you might expect, opting for a home with less square footage and a simpler floor plan is one of the cheapest ways to build a house.Ranch-style homes are usually the cheapest to build because they are single-story structures with simple layouts. They are often rectangular but can also be L- or T-shaped, and typically have attached garages.

How can I save money to build a house?

Here are some ways to save money when building a house: Create a budget, be your own contractor, choose energy efficient fixtures, look for construction savings, purchase affordable building materials locally and choose a simple design. You could also save by comparing bids from lenders and choosing a predesigned plan. Using reclaimed building materials or incorporating energy-efficient elements can help you take advantage of tax rebates and credits.

The Bottom Line

While building your own house can be rewarding, it’s not something to take lightly. Not only is it an expensive endeavor, it’s also a time-consuming one, and you need to think seriously about whether you’re able to give a project of this magnitude the time and attention it deserves to do everything right.

If the costs are similar and you don’t feel up to taking on a big project, you may find that purchasing a home is a better option for you. However, if you’ve decided it makes sense cost-wise, and you love the idea of being able to live in a home that you helped create, it could be worth all the time and effort involved.

Understanding how much it costs to build a house can be challenging for anyone, but this quick guide can help. Conduct your own research on buying a home instead of building, and start an application today with Rocket Mortgage^®.