How Much Does It Cost To Build a House?

What to know before you begin your build

Building a home is a long, complicated process. Working with professionals that have years of experience throughout the planning, building and finishing phases can make the job a whole lot easier for most homeowners. Hiring an architect from the start, for example, is a requirement that will also ensure your home doesn't have structural flaws or unusable spaces that don't match your lifestyle and needs.

There's more to building a house than just getting the work done though. Typically, the process takes time, and even if you hire seasoned pros, you'll need to make a lot of decisions. Unless you hand over your check book and give free reign to an architect, construction company and designer - which you likely don't want to do - you'll need to be deeply involved.

Make sure you're ready for the time and emotional commitment before you take the first step toward building a home. Building a home can be deeply fulfilling and help you get the space you've always imagined for your family, but you need to be prepared for the process before you dive in.

Create a budget

Few people in the world have a bottomless supply of money or a never-ending line of credit at a bank. For that reason, you need to work toward creating a budget that will guide your whole home building project before you start shopping for property.

Here are a few questions to keep in mind when creating a budget for your new home build:

• How much cash do you have on hand? How much of that cash are you comfortable spending to build your home?
• How much can you borrow from the bank to build a home? Getting pre-approved for a bank loan can help you determine how much you can spend and begin to create a budget for everything from property to interior finishing’s.
• What will your payments look like on the money you borrow from the bank? Just like a standard mortgage on a home that's built before you buy it, you'll need to repay the bank the amount you borrowed over a set period of time. 15-year and 30-year loan terms are common.

Buying your property

Building a home for your family starts with choosing and purchasing property that fits your needs. While property prices can vary from city to city and even in different neighborhoods, average estimates can help you get a grasp on what you'll spend. It's also important to remember that land prices in a major city like New York or Los Angeles have little relevance when compared to land in rural areas.

When choosing a property, working with a reputable real estate agent in your area can ensure that you pay a fair market price. They'll also be able to help you find property that meets your needs based on an early idea of what kind of home you want to build.

Note that you may find that your budget may to change once you start physically shopping for property. For many people, a larger percentage will need to go to their property purchase than they initially thought, meaning you might need to scale back on spending when it's time to build.

Average property cost: $3,000 to $175,000 per acre

Plan your build properly

Building a home is a dream come true for many people, and one of the great benefits is that you get to pick and choose what you require out of your space. For this reason, taking your time creating a plan regarding what you want is essential before you do any actual physical work.

You're also going to want to give yourself adequate time to work with your architect and builder to create home plans that really match your desires. In-person meetings and sketches or computer-aided renderings can be very helpful for many people building their home. Rushing this stage could result in a costly build that doesn't truly meet your needs.

You may also want to apply for any unique permits and seek permissions to build while still in the planning stage. If you find out that part of your build plan doesn't work it could be much more costly to revise once you've started on the foundation.

Preliminary home building costs

Often referred to as site work, preliminary costs include building plans that you'll get from your architect and builder. Whenever possible, have your architect and builder work together from the start to reduce the need for costly changes.

Preliminary home building costs also include inspections for water and sewer hookups. These costly inspections can easily run you almost as much as your architect and builder fees. Permits required to build in your city are also factored in here.

Average preliminary costs: $15,000 to $25,000

Cost to build a house breakdown

Home foundation costs

Building a home requires you to start with a solid foundation. In general, foundation costs vary based on the size of the home that you're planning to build. These costs can be steep for some potential builders.

This work starts with excavation, a process that ensures the land is level and ready to build on. From there, the builder will pour the foundation, which is typically made from concrete with additional support from sturdy lumber.

You may also face additional charges based on your region and particular property, as difficult work sites may require more costly excavation work. Homes with a basement tend to cost more at this phase as well.

Average cost for home foundations materials and labor: $20,000 to $30,000

Framing costs

Framing is the next step in the home building process. It's also one of the biggest factors when it comes to the cost to build a home. However, a solid foundation is essential to create a safe, long-lasting home that will meet city codes.

The framing process is also what gives your home its shape, and many people think of it as building the bones of the house. As framing nears a conclusion, you'll start to see the layout of your home in real, physical terms.

Framing requires a lot of wood to do properly, as does the sheathing that protects the internal structure of the home. For these reasons, materials can be quite costly. A lot of man hours also go into the framing of a home.

Average cost for home framing materials and labor: $35,000 to $50,000

Exterior finishing costs

Exterior finishing sounds like exterior paint and putting in a few hedges, but the truth is that it's a much more important part of your home building project. The term exterior finishes actually refers to the exterior wall around your whole home that works to keep inclement weather out. This wall also provides support for your roof and overall home structure.

The addition of elements like cutouts for doorways and garages are part of the exterior finishing cost of building a home.

Average cost for exterior finishing materials and labor: $28,000 to $38,000

Install major essential systems

Essential system is another confusing term for average homeowners, but it simply means fitting your home with plumbing, gas, electric and HVAC systems. While there are ways to reduce these costs, like installing a split A/C system, major systems are considered a vital part of any home build.

Average cost of major essential systems: $30,000 to $45,000

What about the interior?

Many people trying to figure out the average cost to build a home go through the property buying phase to the planning stages carefully and thoughtfully. As the home moves through the foundation, framing and exterior finishing stages, it can feel like you're just a step away from your dream home. While most of the work is done, you can't forget about the interior of your home.

Interior finishing refers to everything from painting the inside of your house to adding a fireplace and other details that make your space livable and comfortable. Adding essentials like doors and trim will also happen during the interior finishing phase. Countertops, sink fixtures, toilet fixtures and all of the other common household essentials are included here as well.

These costs are going to add up even if you're frugal when it comes to financial planning. Spending as much as you can here does make sense though since you'll be in your home often for many years to come.

Average cost for materials and labor: $65,000 to $120,000

What's the overall cost to build a home?

Custom homes made to meet your needs come in a range of sizes and with all sorts of different appointments. A 1,500 square foot house in a rural area is going to cost much less than a 4,500 square foot home in a major metropolitan area.

There is an average range for what the average home build will cost however, with most homes come in between $250,000 and $400,000. High-end homes may be closer to $500,000 or up. Buyers in big cities could easily spend $600,000 to $800,000 for a comparable build.

A little confused on how to break down different home building prices? Use our smart cost to build a house calculator to learn more about what you can expect to spend when creating your new home.

Average cost: $250,000 to $500,000

Cost per square foot

Every home is different, and while the average national cost to build a house can be a helpful figure to keep in mind, it may not be entirely applicable to your home. Another way to determine the cost to build a house is by the square foot.

On average, building a home costs about $150 per square foot as a ballpark figure. How you choose to build your home will obviously impact the total cost. For example, homes with luxury appointments like marble and granite floors will cost more per square foot than those that utilize more economical materials.

Average cost per square foot: $150-$275

Should I buy or build a house?

A lot of people looking at the cost to build a home start to wonder if buying a house that's ready to move into would be cheaper. This question is somewhat difficult to answer, and in many cases, you're more likely to break even than you think.

Building a home will generally cost you more up front. However, there are benefits to that, namely knowing that everything in the house is new, properly-installed and in good working order. A home that you did not build may have unseen issues even if you get proper inspections.

Repairs in the first 10 years of owning a home are also likely to be considerably less if you do the building. Once you factor in a few thousand per year on repairs and essential upgrades due to aging parts like plumbing, the extra $60,000 to $100,000 you'll spend on average to build a home is much more comparable to buying an existing house.