How Much Does It Cost To Build A House? Breaking It All Down

No two houses are exactly the same.

Even if they’re “cookie cutter” homes built by the same company in a new development, there are always small differences. Their foundations might be slightly different because of the pitch of the land, the workers may have done a slightly better job on one house than the one next door, or the developer may have deliberately made slight changes to each home’s exterior design so they look a bit different.

And if you pick out any two houses listed on Zillow or realtor.com, you’ll always be able to tell them apart – even if they’re on the same block.

Our point is simple: since every home is different, there’s no easy way to predict how much it costs to build a house.

Needless to say, it’s much less expensive to build a rustic log cabin from a kit, than it is to construct a 4,000 square foot contemporary home. Custom-designed houses are more expensive than ones built on an assembly line and assembled on-site. It’s cheaper to build a house in Billings, Montana than in San Francisco.

Even the addition of an extra bathroom or a wrap-around porch can boost the cost of building your dream home significantly.

There are some national and industry statistics you can use to come up with a decent guesstimate, though. And if you break down all of the work that goes into building a house – factoring in your own needs and budget – you can come a lot closer to an accurate number.

Let’s do both.

The Average Cost of Building a House

We’ll start with a single number, and go from there. The average cost to build a home in America is close to $300,000.

Estimates do vary a bit. HomeAdvisor says that the average cost is $286,418, while data extracted from the U.S. Census puts the number at $298,000. No matter which estimate you use, that’s still significantly lower than the average sales price of a new home that was just built: $408,000.

However, there’s one very important difference. The average sales price of a new home includes the house and the land. The estimated cost of building a home does not include the land it’s built on, or any associated costs required to make it ready for a house.

The National Association of Home Builders says that in 2019, the average cost of a finished home lot was about $90,000; that’s for about 22,000 square feet of land. So if you take the average cost of land ($90,000), and add it to the average cost to build a home ($300,000), the total is almost $400,000 – very close to the average sales price of a new house.

It would be easy to conclude that buying a brand-new home – and moving in a month or two later – makes more financial sense than spending a year or two building your own house.

That ignores one key factor, though. When you build your own home, you can design it to your exact specifications. To some homeowners that makes all the difference; to them, the final cost is less of a concern than the final product.

And remember, we’ve only been talking about average costs. You can certainly build a house for much less.

Bottom Line: The average cost to build a house, nationwide, is around $300,000 – and that doesn’t include the cost of the property it’s built on. When you add in the cost of land, building a home costs about as much as buying a newly-built one. But those figures are only national averages, so many of the people who build their own home pay significantly less.

Building a House Can Cost a Lot Less – Or Even More

We promised that our $300,000 number, the average cost of building a house in America, was just a starting point. Let’s dig deeper.

Generally speaking, an “average cost” means that half of the people paid more than the average, and half of them paid less. Statistics bear that out. The typical range of home-building costs runs from about $120,000 on the low end, and $452,000 on the high end.

Why is there such a huge difference? Since the cost of land isn’t included in these estimates, the major factor determining the home’s cost is its size.

A good rule of thumb is that building a house will cost between $100 and $200 per square foot. That’s a national average, and it’s far from definitive; if you’re building in New York or Los Angeles, you could pay as much as $500 per square foot. But it still gives us a good idea of how the size of a house can affect its construction cost. Here are a few examples:

1,000 square feet        $100,000 – $200,000
1,500 square feet        $150,000 – $300,000
2,000 square feet        $200,000 – $400,000
3,000 square feet        $300,000 – $600,000
5,000 square feet        $500,000 – $1,000,000

So building a smaller house can be cost-effective. What else factors in?

The materials, products and appliances used to build a home largely determine whether its cost is on the lower end or the higher end of the spectrum.

Here are just two examples.

If you’re building a house with moderate-quality wood siding, figure on spending about $7 per square foot. (That cost rose even higher during the pandemic.) Substitute inexpensive vinyl siding instead, and you’ll only have to pay about $2 per square foot; that’s a savings of about $10,000. And when outfitting the kitchen, lower-quality appliances will cost a total of about $10,000. High-end smart appliances can triple the cost, to around $30,000.

Another way to cut costs when building a house is to lower your expectations.

Sure, building your custom dream house on a gorgeous lot with spectacular views would be ideal. But you can save about 15% of the total construction cost by building in a new subdivision that’s just going up. The developers put up those houses for you, and normally provide an extended warranty, too.

Sure, you can pay an architect $5,000 – $10,000 to design a home with the floor plan you’ve had in your head for years. Or you can buy an already-finished house plan for as little as $2,000, and either pocket the savings or use them to upgrade the home’s finish materials.

Now, let’s talk about where you shouldn’t try to save money.

When building a house, perhaps the biggest single expense is hiring a general contractor. This is the person or company that coordinates and supervises the work, obtains the permits, hires the subcontractors, and ensures that the entire project moves smoothly and on budget. A general contractor typically collects 10-20% of the job’s total cost, which is built into the price they quote for all of the work.

Some people who decide to build their own house are tempted to run the project themselves, in order to save the tens of thousands of dollars they’d have to pay a general contractor. That’s usually a big mistake.

These professionals have the expertise to supervise the construction work and navigate the legal hurdles often created by local authorities and building codes. They also have extensive networks of subcontractors they use regularly, and are usually able to negotiate the best possible rates for labor and materials.

In short, general contractors know exactly how to build a house. Most homeowners probably don’t, and – especially when they make inevitable mistakes along the way – their lack of knowledge can end up costing them a lot more than they’d pay an expert to run the job.

Bottom Line: The bigger the house, the more it will cost to build. Downsizing your dream house, settling for less-expensive materials and appliances, using an already-existing house plan, or buying in a development will cut the total cost of the build significantly. Supervising the work yourself instead of hiring a general contractor, however, may be a short-sighted and counter-productive way to try to lower the cost of building a house.

Where Does All The Money Go?

The late Senator Everett Dirksen once famously said, when discussing federal spending, “A billion here, a billion there, and pretty soon you’re talking real money.”

We’re not talking billions here, of course, but we are talking about hundreds of thousands of dollars to build a house. Where does all of that money go?

This is just a basic outline of how the costs break down, but it will let you see that the $300,000 average cost of building a house wasn’t just pulled out of thin air.

Land

As we’ve mentioned, this isn’t included in the $300,000 number. When you’re sitting down to figure out how much to budget for the build, though, it’s obviously an important factor to consider. The cost of preparing the land for a home can also be significant, particularly if there’s a structure on the property that needs to be demolished.

Home Plans and Permits

The average cost in this pre-planning stage runs around $15,000 to $20,000, with most of it spent on architects, engineers, draftsmen and interior designers. Using a pre-drawn plan or template should lower the cost by at least half, though. Once the plans are submitted to the general contractor they’ll obtain the necessary building permits, which can cost as much as $2,000 depending on where you live.

Foundation

Here’s another big variable. If you’re building the house on a simple concrete slab, the average cost will be around $10,000. If you’re excavating the lot in order to build a basement, the cost escalates significantly and can easily hit $35,000-$40,000.

Framing

You probably know that the framing of a house is basically its skeleton, defining its shape and structure. What you may not know is that this process goes far beyond the wood that’s erected on the exterior of the house. Framers also install the partitions, roof trusses and subfloors, and often the door and window frames. This work doesn’t come cheap, averaging anywhere from $25,000-$50,000.

Roof and Exterior Siding

Whether you’ve chosen to use wood or a less expensive siding for your home, and whether you’re using asphalt shingles or something pricier for the roof, expect to spend a minimum of $20,000 at this stage of construction. Costlier materials can add as much as $30,000 more to the price, particularly with the increased cost of wood and other construction materials caused by the pandemic.

Plumbing, Electrical and HVAC

If you’ve ever wondered why major repairs to your plumbing, electrical, heating or air conditioning cost so much, it’s because these are very expensive systems. Installing brand-new ones, which includes running all the pipes, wires and ducts throughout the house, and connecting the systems to outside water and power sources, can easily run between $30,000 and $75,000 when you’re building a new home.

Interior Finishes and Fixtures

You’re right, they haven’t even put in the floors or drywall yet. That happens during this stage, along with the installation of insulation, windows, doors, appliances, countertops, and a million other little details like the painting and finish work that turn a shell of a house into the makings of a home. It’s hard to put a firm number on prices since there are so many variables, but a bare-bones interior can still cost $50,000 and a luxury home’s interior can hit $175,000 or more.

Finishing Touches

Patio or deck? Driveway? Landscaping? The meter is still ticking, so now’s the time to add any finishing touches you’ve planned – and after that work is finished, municipal inspectors will have to approve the work before you can move in. The more “extras” you want for your dream home, the more it will cost, but you can easily spend $10-20,000 before the moving trucks can arrive.

Bottom Line: When you add up the costs of building a home, it’s easy to see why the process is so expensive. Almost every phase of construction adds tens of thousands of dollars to the final price tag – and even more if you’re using high-end materials or design features.

That’s a Lot of Money!

It sure is.

If you’ve been using a calculator while reading, you’ve seen that our high-end estimates can easily push the cost of building a house well above the $300,000 national average. You’ve also seen how reducing the size and scope of the work can bring the price way down.

If your heart is set on building, though, here’s a ballpark idea of what your budget might buy. Remember that these prices don’t include the cost of land.

  • $150,000: A simple 2-3 bedroom, 1,000 square foot home.
  • $250,000: A 3-bedroom, 2,000 square foot home with more features.
  • $400,000: A modern 4-bedroom, 3,000 square foot home.

Of course, if you save money in one area you can spend it in another, so those specs aren’t hard and fast. Even so, it’s easy to see that – when you factor in the cost of the land – the cost of building a house is likely to equal or even surpass the price you’d pay for a similar home that’s already been built.

How Much Does It Cost to Build a House: FAQ

Q: Once you eliminate expensive cities like New York and San Francisco, does the cost of building a house vary by state?
A: Definitely. The average cost in Tennessee ranges between a low of $185,000 and a high of $380,000. In Connecticut, the average cost soars to a range of $300,000 to $800,000.

Q: Is buying a modular home much cheaper than having one built from the ground up?
A: A pre-built home usually costs between 10-15% less than a custom-built one. Some smaller prefab homes manufactured to be assembled on-site can cost less than $200,000.

Q: Is it cheaper to build a house out of brick or concrete, instead of wood?
A: No. Using concrete will add anywhere from $2-$8 per square foot to the cost of building a house, although you’ll save on your heating and air conditioning costs because concrete provides better insulation. (You’ll also get a lower rate for home insurance, because termites can’t eat concrete.) Brick is much more expensive to use than wood, because laying brick is more difficult and time-consuming.

Q: What’s the least expensive way to build a house?
A: Make it small and rectangular, so it requires less work and less material. If you need a bigger house, build up and not out; it’s much cheaper to build a square, two-story house than a sprawling ranch.

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