The cost to build a house depends on several factors, including location, labor, and materials used in construction. But i🃏f you’re having trouble finding the perfect home, building your own might be a good solution.
Building a house usually means more work, especially if you take on most of the labor yourself. The advantage is that you get to create a home customizedꦓ to your needs, while potentially savingꦚ money.
Before you build a house, it’s impo༒rtant to consider the costs involved 𒁃and whether they’ll fit into your budget.
- How much does it cost to build a house?
- Is it cheaper to build or buy a house?
- Factors that contribute to building a home
- Breakdown of homebuilding costs
- When to consider building a house
How much does it cost to build a house?
The average cost to build a house in 2022 was $392,241, or roughly $153 per square foot, according to the National Association of Home Builders. This includes all construction costs but doesn’t include expenses for f🌟inancing, overhead, or finishing a lot.
Several factors can influence your total costs, such as where you build your home, its square footage, and the style of home. Other aspe൩cts to consider include the cost of building materials, labor, and interior or ꦿexterior finishes.
Additionally, the cost of real estate has increased since the start of the COVID-19 pandemic due to limited inventory and high demand. It also tends to be more expen💟sive in places like New York, where the median listing price per square foot is $477.
Is it cheaper to build or buy a house?
This depends on the size of the house, loca🌃tion, and how much customization you need🔥. In some cases, it might be cheaper to purchase an existing home.
The median price for a newly-built home in January 2023 was $427,500. In contrast, the median home price for a pre-existing house was $359,0🎐00. With a median size of 2,271 square feet, this breaks down to roughly:
- Buying a new house: $188 per square foot
- Buying an existing house: $158 per square foot
- Building a house: $153 per square foot
Keep in mind that prices can fluctuate with the housing market. You might also be lookingඣ at higher costs if you want to live in a more populated area.
If you’re interested in a simple or smaller home and can do much of the labor yourself, it might be ✨cheaper to build it. If you plan on securing financing, like a construction loan, be prepared for any additional costs like interest charges or origination fees. Depending on your interest rate, yo𒅌u could end up paying more than you expected.
Another option is to purchase an existing home for🅷 sale by the owner — this means there’s no real estate agent involved. Owners may be more willing to negotiate the price, making this a potentially cheaper option.
Factors that contribute to building a home
Everything from the square footage to the materials used can influence the cos𓃲t of building a home. Consider the following factors and make some calculations before getting started to make sure this option fits into your budget.
Square footage
The median size of a new single-family house was 2,271 square feet in 2022, according to the U.S. Census Bureau. Square footage refers to the size of a home, either a specific room or the available interior space. Many homes are valued based on the cost per square foot. So, the bigger your hꦍome, the higher your costs are likely to be.
Assuming the 2022 median cost of $153 per square foot, here’s how much you might spend to build a꧒ house:
- 1,000 square feet: $153,000
- 1,500 square feet: $229,500
- 2,000 square feet: $306,000
- 2,500 square feet: $382,500
- 3,000 square feet: $459,000
Location
Location plays a big role in determining the cost of a home, whether you’re thinking about building or buying one. A house in one city or county could cost much mo💃re — or less — than a simila꧂r one in another location.
This is due to several factor🌺s, including supply and demand, labor and material costs, 🔯permit requirements, and regulations in the area. Homes located in larger cities that don’t have much room for expansion can also be more expensive.
Other things, like the lot size, location, and shape, can also affect your total costs. For example, you may end up spending more on foundation work an♓d engineering if you’re building on a slope. The same applies if there are other potential hazards on your property that need to be removed.
Keep in mind that the cost of land is also a factor. The average cost of an acre in the U.S. is $17,736. The average lot sꦓize is 17,2🌺18 square feet, or about 0.395 of an acre.
Labor
The cost of labor accou🎶n♕ts for nearly 40% of building a home. Labor costs can vary based on the state or region and the home’s size and structural complexity.
Costs could also be higher depending on general contractors in the area and what they typically charge. When building a home, you may need to hire several professionals, including a construction manager, roofer, ele🌞ctrician, plumber, and framer.
Materials
Materials such as lumber, flooring, concrete, drywall, and finishes make up approximately 60% of the total cost of the home-bu😼ilding budget. Depending on the quality of materials y💮ou use, you may be able to reduce costs.
If you work with a builder, they can give you a rough estimate based on the home you 🌟want. If the price is too high, ask if they can recommend less expensive materials that work with your budget.
Breakdown of homebuilding costs
Ultimately, the cost of building your own home will vary based on𝓡 the location, square footage, ma꧃terials, and labor involved. That said, you can break down the costs for a single-family home into the following categories and typical price ranges:
| Category | Average cost | Details |
|---|---|---|
| Site work | $29,193 | Water and sewer fees, building permit fees, and engineering costs |
| Foundation | $43,086 | Preparing the area, building retaining walls and the foundation |
| Framing | $80,280 | Roof, trusses, and associated materials |
| Major systems | $70,149 | HVAC, electrical work, and plumbing |
| Exterior finishes | $46,108 | Roof, windows, doors, and outdoor walls |
| Interior finishes | $94,300 | Drywall, trims, doors, lighting, appliances, plumbing fixtures, painting, and insulation |
| Final steps | $23,065 | Landscaping, clean up, and outdoor structures (e.g., a garage or shed) |
| Other | $6,059 (varies depending on home size and location) | Property taxes and insurance premiums |
The total average cost adds up to $392,241.
When to consider building a house
Building a house can be pricey, but it might be worth it if you’re up for the challenge. Beꦯfore you break ground, consider the ♛following:
- Time commitment: Building a home can be time-consuming, especially if you’ve never done it before or are in the beginning stages of planning. You’ll also need to make a lot of decisions as you go through the process.
- Budget: Review your finances carefully and get an estimate on costs from a professional (or two). Leave some wiggle room in case something goes wrong or the costs increase.
- Financing options: If you don’t have the cash on hand, you might need to take out a construction or personal loan. This can increase costs since most loans come with lender fees and interest charges.
- Location: When you build your own home, you get to choose where to live. This can either limit or expand your options considerably.
- Permits and restrictions: Counties and states have different building restrictions and permit requirements, so make sure you’re aware of those.
- Customization: Building a home comes with a lot of customization options. Not only could you design your dream house, but you could also build something bigger if you’ve outgrown your current living space. This can cost more, though.
- Homebuilder: If you don’t already have a builder or architect in mind, now’s a good time to find one. You may need to compare a few before you find the right one. Check with your local homebuilder’s association for a list of local builders.