How Much Does It Cost To Build a House?

Finding the perfect home is a challenge. And if it feels like you can’t find a home that speaks to you, you may be thinking of building your dream home instead of buying an existing home that doesn’t check off all your required boxes.

Before you go out and buy yourself a pair of safety overalls and construction tools, you should know that you don’t need to be a builder, contractor or carpenter to build a house. Having some basic knowledge of construction or home building might be helpful, but you should leave the construction of your dream home to the professionals.

Of course, leaving the building to professionals ain’t cheap.

We can tell you how much it costs to build a new house, how these costs compare to buying an existing home and how to make your new-construction home a little more affordable.

Average Cost To Build a House: New Construction

The average cost to build a house will vary based on location, labor costs and the type of materials used.

The first thing you’ll want to do is figure out how much house you can afford. Whether you’re building or buying, it’s always a good idea to build a budget and stick to it.

On average, the cost to build a home in 2022 is around $150 per square foot, ranging from just under $110,986 to $451,275.⁽¹⁾ But keep in mind that these numbers are just estimates. They may not reflect prices in more expensive real estate markets, like San Francisco and New York City. 

Building material costs and labor costs can fluctuate, and lately, they’ve been soaring. From 2019 to 2022, residential construction costs increased by 42%.^[2]

If you’re wondering why cost estimates are so wide-ranging on new home construction, it’s because houses vary significantly in size, construction and quality.

Average cost to build per square foot

The more square footage you want, the more expensive your home will be. Every square foot adds to the cost of building a home. So if you want a big house, expect to pay the big bucks. 

Use our table to estimate how much it will cost to build your home based on square footage.

Breaking Down Building Costs

Larger homes usually cost more than smaller homes, but the size of a home isn’t the only factor that will influence the building cost. 

Every decision you make can impact how much it costs to build your house, from the architects and engineers you choose to your choice of flooring and interior finishes. Plan ahead, decide how much you’re willing to spend on each part of the home building process, and above all, stick to your budget.

Check out this chart for an approximate breakdown of the different costs associated with building a new home.

Land: $3,000 – $150,000

You can always make changes to the house. And while land can be modified – it can’t be moved. So it’s important to buy a lot in an area you like. Location often determines the value of the land. Land in a rural, undeveloped area will be much less expensive than land in a densely-populated urban or suburban area.

Just like you can take out a loan to buy a house, you can get a land loan to buy undeveloped land or finance the purchase of a vacant lot that’s developed and prepped for construction.

Land loans typically have higher interest rates than traditional mortgages and often require a larger down payment (usually 15% – 25%). 

When you’re shopping for land, you should be concerned about more than the property’s appearance. Research how the land is zoned, the cost of development (if you’re thinking of buying undeveloped land) and any easements that might impact your use of the home.

You can either buy land that’s zoned residential and ready for building (improved land) or raw land provided courtesy of Mother Nature that hasn’t been connected to local roads or utility lines (unimproved land). 

Because it takes more time and money to transform unimproved land into improved land ready for a move-in ready home, land loans for unimproved land are more expensive and harder to qualify for than land loans for improved lots.

Building permits and regulations: $500 – $5,000

Building a home comes with a lot of red tape. Almost everything you do requires you to pull permits. It can cost you around $500 – $5,000.^[3]

When you build a home, some of the permits you’ll need to pull include:

• Basement permit: $1,200 – $2,000
• Electrical permits: $10 – $500
• HVAC permit: $250 – $400
• Swimming pools, patios, sheds and other outdoor improvements: $200 – $2,000 each

Foundation: $7,000 – $44,500

Though you’ll probably forget it’s even there, the foundation of a home is what keeps it from moving. Building a foundation is a major project that can range in cost from as little as $5 per square foot to as much as $37 per square foot.^[4]

Here are some examples of different foundation types and their average costs:

• Basement foundation: $24,000 – $44,500
• Concrete slab: $7,000 – $20,000
• Crawl space: $8,000 – $24,000

The average cost of building a foundation is $8,609, though you can expect to pay a lot more if you choose anything besides a slab foundation.

Framing: $14,000 – $32,000

Think of your home’s framing as its skeleton. It gives a home its shape so builders can put up the exterior, drywall and roofing.

Full framing for a 2,000-square-foot single-family home will cost an average of $14,000 – $32,000. Your costs can increase if the home is larger or has multiple floors.^[5]

Exterior: $10,400 – $25,500

The exterior of a home consists of siding and roofing. As with building materials, siding and roofing come in a few varieties and prices.

The average price of new siding is between $5,400 and $15,500.^[6] A new roof can cost $5,000 – $10,000.^[7]

HVAC, plumbing and electrical: $25,000 – $42,000

Your home’s utilities are what keep the lights on – literally. HVAC, plumbing and electrical systems are essential to making your home a place where you can live comfortably. 

Again, you can expect the costs of these systems to increase if you’re building a larger home (more ducts, pipes and wires = more $$$).

On average, installing HVAC systems will cost $5,000 – $10,000,^[8] new plumbing will cost around $8,000 – $12,000^[9] and you can tack on another $12,000 – $20,000 for your electrical system.^[10]

And none of this pricing includes the fixtures you’ll need to install, such as lights, toilets or sinks.

Interior finishes: $50,000 – $175,000

The interior finishes of a home consist of the interior surfaces, from the walls and ceilings to flooring and lighting. This is where the costs of fixtures will come in. 

Interior finishes average anywhere from $50,000 – $175,000,^[1] though specialty or custom finishes can easily cost tens of thousands more. For example, vinyl flooring can cost $2 per square foot, while Brazilian walnut and other high-end hardwood floors can cost $20 per square foot, as much as 10 times more.^[11]

You can customize Interior finishes for aesthetics (like crown molding) or function (like built-in shelving). But upgrading interior finishes is expensive work that can quickly destroy even the best budgets.

Additional expenses: $5,000 – $10,000 and up

The price tag is already well into the six-figure range, and we haven’t even talked about some of the additional expenses associated with building a home. 

Do you want to build a fence for your dog or a deck to enjoy your morning coffee? How about adding a driveway or landscaping to boost the home’s curb appeal? 

These smaller projects are frequently overlooked – but that doesn’t make them any less important – or expensive. Plan on spending between $5,000 and $10,000 for basic outdoor additions like a driveway or landscaping. 

And if you want more than the standard build or design, you may need to add a few more zeroes to the final price. Extras can cost you $10,000 or more.

Other considerations for building a house: $10,000 – $50,000

Building a house isn’t like buying a T-shirt in a department store. Houses and land don’t come with literal price tags or barcodes. And when you’re building a house, prices can change in the middle of your project. 

In 2020 and 2021, the COVID-19 pandemic and supply chain issues that led to product shortages shot the cost of lumber to record highs, with prices more than doubling in less than 6 months.^[12] 

Construction projects almost always go over budget and rarely hit deadlines. Whether you’re dealing with unanticipated costs or issues stemming from problems in the supply chain or even bad weather, many factors can delay the completion of your new home and inflate the cost of building it. For example, a delay could force you to continue paying rent or another mortgage longer than expected.

That’s why you should add a cushion to your construction budget. We recommend that it’s at least 10% of the estimated price to build the home. That should be enough to handle any surprises, price increases or the consequences of delays. If you think your new home will cost $300,000 to construct, earmark an additional $30,000 just in case.

If you’re having second thoughts about building a house because of the costs, you might find the cost of building a tiny home easier on your wallet. Yes, a tiny home lacks the square footage of your average house (hence the name), but you can build a beautiful home for a fraction of the price.

Is Building a New House Cheaper Than Buying?

Building a new house may be cheaper than buying an existing home, but that depends on the housing market, building costs and other factors. So it’s hard to say whether it’s cheaper to buy or build a house. 

Especially when you consider the long-term costs of home ownership like repair costs, energy efficiency of new homes versus older ones, homeowners insurance premiums and more.

On paper, buying an existing home is usually cheaper than building a home. The Federal Reserve Bank of St. Louis found that buying a new-construction home in September 2022 cost about $470,600, while the median price for an existing home was $384,400.^[13]

While the cost of new-construction homes might be higher, they usually cost less to insure, have lower energy bills and may be less expensive to maintain.

Costs will likely be front and center when you’re deciding between building a home or buying an existing one. Think about the value of living in a home custom-built to your needs and desires. Would it be worthwhile to build a home so you can finally cook in the kitchen of your dreams or host parties in a Pinterest-inspired backyard? Only you know the answer.

If you decide to build your own home, use our tips to help make your building adventure a little more affordable.

Tips To Afford Building Your Own Home

Just because your home only exists on a blueprint doesn’t mean you can’t get a mortgage. 

Plenty of lenders are willing to finance the construction of your new home. Consider looking into a Federal Housing Administration (FHA) construction loan. 

An FHA construction loan is a solid option for borrowers with lower credit scores or smaller down payments saved up. An FHA construction loan combines the benefits of a short-term construction loan and a standard FHA mortgage.

If you take out a construction-only loan to finance building your new home, you’ll need to refinance the loan once construction is complete. 

A personal loan might be a viable alternative if you’re struggling to qualify for a land loan. Lenders may not want to issue a land loan for a property that needs a lot of work before you can build, but you can use an unsecured personal loan for land to buy any type of land you want – improved or unimproved.

Build a Budget Before You Build Your New Home

Before you build a new home, build your budget. Building a home isn’t an exact science. But if you want the project to succeed, you’ll need to stick closely to your budget, anticipate the unanticipated and exercise extreme patience.

If you’re ready to build a custom home, explore construction loans that will finance the transformation of your dream home into a brick-and-mortar reality.