How Much Does it Cost to Build a House?

Reblogger Elizabeth Weintraub Sacramento Realtor Top 1%
Real Estate Agent with RE/MAX Gold DRE #00697006

Home buyers in Sacramento face a tough decision when it comes to choosing between building a house or buying a resale. Many buyers today want newer homes with all the upgrades. They are particularly attracted to SMART homes so they help to conserve energy, reduce global warming, and run homes from a cellphone app. Some buy land, sit on it for a year or two and never build. I suspect those are the buyers who did not consider how much it costs to build a house.

Thanks, Peter Mark, for the informative article.

Original content by PeterMark SEO

Are you thinking about building a new house? If you are, there are some associated costs with any new home build you should know about.  In addition, with so many hidden fees and unforeseen problems, how do you make sure you have enough money budgeted to build a new home? In this article you will learn not only about the costs to build a house but about some other critical elements that are just as important.


New Home Prices Are Ever Changing and Local

Way back in my contractor years, I worked with national builders like Pulte, Mungo, Rymark and even some high end custom home builders in Hinsdale, Illinois and in the Carolinas. I can remember pricing per square foot for a new home ranged $50 -$75 to build out a new home. Now those costs have in many cases more than doubled to $100 to $120 per square foot now. With the national average at $150 per square foot. This is for a very basic home and nothing fancy. Also keep in mind these prices may not represent your local area but are more like an average from the southeast and Midwest areas. Please consult with a local Realtor who can not only connect you with a local home builder but help you in a lot purchase find as well. I have made a local Realtor list below by city and state that I can recommend. An experienced local Realtor doesn't cost you money, but rather guides you in the right direction by saving you time, money and headaches. It pays to get with a local Realtor. Especially for your most valued asset in line.

As far as home prices on the basic if you choose vinyl siding and vinyl floors, carpet you can pay $110 a square foot for the basic new home build. If you go with hardwood floors, tile, solid surface counter top, custom cabinets and some kind of upgraded exterior finish like a fiber cement hardiplank, expect to pay $135 per square foot. Here is a general breakdown per foot.


Entry Level New Home Cost -  Expect to pay from $100-$120 cost per square foot.
Mid Level New Home Cost - Cost here which is average cost I would say is about $130-$150 cost per square foot.
High End New Home Cost - Prices can be from $150-$250 per square foot. Exterior finishes like a stone facade and brick on the outside. Brazilian cherry or a plank walnut, more crown molding, coffered ceilings and copper gutters. Depending on whether you use a home builder or not, it pays to research all material costs.


These are fixed cost when building a new home. Things that you simply can't adjust. These are costs for materials and labor. Square feet prices are just prices going up and in many areas labor is in short short supply. If you're building yourself and material shopping yourself, you can save 30 or 40 cents per stud. That pales in comparison to the amount of money you can save on your choices on counter tops and plumbing fixtures and electrical fixtures.  Most of what has been spent prior to the drywall is a fixed cost. There is very very little that you can do to reduce the costs of the building material in the bones of your house. It's going take a certain amount of concrete, a certain amount of lumber and a certain amount of labor to build a new house.Those things add up.


Three Main Elements to Consider in New Home Construction Costs

How much does it cost to build a house boils down to really three main areas. Design, Cost and Marketability. The Design is actually the most important to consider in my opinion when trying to figure out costs of building a new home. It is so closely related and if you get it wrong you will be stuck with a poorly designed house. Regardless if you are building a house for yourself or not, these three areas have got to be part of your calculation. Don't  just  look at the line items to build a house like an accountant.  You need to see the whole picture of a new house build.


1. Design

new house design cost

One of the rules of thumb when you start this is to get very clear in your mind one undeniable truth about building something. You will never recover if you commit yourself to bad design. Bad design means is if you put your house in the wrong spot. If the location is wrong. If the location on your lot is wrong. If the orientation relative to the solar exposure or your driveway location is off. The orientation of the windows in your house is wrong, then either you're not going to get a view or you're going to get a view that you hate.  I can't stress enough about bad design. If you get the design wrong, it'll always be wrong.


Design is something you can't recover from. Bad design in real estate lingo can also mean functionally obsolete. Here are some examples of bad design. Building a 5 bedroom home with 2 bathrooms is one example. Getting the elevation of your house wrong. If you get your house too low for example the water is going to drain the wrong way. Higher is generally better because water is what damages homes. I have personally done way too many water repair jobs myself They are bad news.


What about the size size of a house? You have to think carefully about the difference between what we want and what we can afford. Then consider the function. Function is one of the trickier aspects of design because if you haven't been professionally trained it's hard to anticipate how a house actually functions. What it'll actually be like living in the space.


Also, there are many energy efficient options available in today's market like upgraded insulation, concrete walls,  solar and much more. Be sure to check out local home shows, parade of homes or see a local Realtor and builder resource center to learn more. Maybe you want to build a custom designed green home and there the price per square foot can vary a lot also. Building your own home can be very rewarding, but consider all major systems and additional factors you may have not considered. Heating and cooling building designs to suit your area you want to build in. This can either cost your or save you in the long run.


There are many home designs out there to suit your needs but affect costs in home building. Talk with a custom home builder and they might help you oversee your costs of building as well as the pros and cons. So that's why at some point or another I always recommend you get input from a professional architect and builder.  A local Realtor will put you in contact with the local leading Architects and Home Builders. Be sure to consult with a structural engineer in some cases where you have a special lot which requires a unique foundation buildout


2. Cost

For any home builder cost is a big driver. Whether you're doing this yourself or using a general contractor to handle all of the aspects of the process, dollars are the thing that we tend to think about and talk about first and most. First it's not just square footage. In other words floor space that adds to the total costs, it's cubic feet enclosing the structure that add the true cost of a new home. For example if you are going to have  2-story high spacious rooms with grand foyers and entries. This adds a big chunk to the total costs of a new home. Any time you add cubic footage volume inside a house it is directly related to total costs. Simply put taller walls, taller roofs are more material costs.

But did you know a single story house is more expensive per square foot than a two-story house? Yes it's true,  because you are actually building half exactly half of the foundation and half of the roof per square foot.

A one two-story foundation gets you twice as many square feet of living space. But it is less expensive to build two-story generally than single-story in terms of square feet.


Only about 20% of the cost of a house is in the framing, the structure, the walls,sheathing and the joists. So when you're looking to save money on a house framing  this is not the big target but can be manageable.

One thing that can kind of skew that framing number is the roof. There are expensive roofs and there are inexpensive roofs. The expensive roofs are steep.  Steep roofs are multi angled,  they're multi-pitch, have dormers and hips. They have all manner of decorations and valleys. They're beautiful but at the same time they're expensive to frame. If you can simplify your roof design you're going to reduce your construction costs least in that 20% or so of the construction costs that are involved in the framing.


When the Drywall is Hung You are Far from Finished

Most people think when the drywall is up we're almost done and can move in. In reality, when the drywall is hung you're about 50% of the way home. Don't let your expectations get out of control when you happen to get to that point. But once the drywall is taped and textured, then your design choices can have another huge impact on final costs.


The aesthetic surfaces cost you have to consider now. By surfaces I mean the moldings, the floor coverings, the countertops, cabinets, light fixtures, plumbing fixtures, tile, backsplash, hardware on the doors, the doors themselves and much more. These are places that costs can really grow or can be pulled back. 

The square footage, the size of your house is a more valuable commodity than the surfaces that you install. You can always upgrade surfaces and if you live there over about 10 years you will. Fancier fixtures can be installed. Chandeliers can be changed out when new ones go on sale. You can upgrade the flooring too. You can do things over time but you're not going to change the size of the footprint of that house without a serious outlay of cash.


So if you have a budget that has to go a certain distance and you think that it is the size that you need for your growing family or maybe a home business or something, save the money on the surfaces, invest it in the space and then upgrade your environment as your economic circumstance changes through the years.


3. Marketability

marketability of new house build

This I can write on from first hand experience also.  So a close relative of mine happens to be a Doctor. But I can tell you being a Doctor does not foolproof you in a new home build when it comes to marketability. Marketability applies to you even if you're building the house that you're gonna raise your kids in or that you're gonna retire in or that you intend to be in for a long time. Eventually somebody, either you or those who inherit your property are going need to sell this so it is not wise to disregard this.


You see what happens is many people who go into building a new home or building a custom home for that manner do not consider the back end of getting into a new house. They get emotionally tied to making it so custom to their tastes and desires, they forget about the marketability of the house. What I mean here is when it comes time to sell. You need to equally thing when you build or buy a new construction home, you must ask yourself, can I market and sell this home too?


What happened to this Doctor was a true loss of time and money. She had built a custom home in a subdivision that simply was not only the biggest home but the most unique to suit her tastes. It took five years to sell and numerous price reductions and much money lost to learn this hard lesson.


 Land Preparation for Your New House

land preparation costs new home

The cost to prepare land for building a house is another figure to consider. There's a lot of different scenarios here. The  most common would be if you're going to be building on a lot in a fully improved subdivision. That means that there's sewer, water,gas and electric in the subdivision. You pretty much just have your building permits and you've got your connection fees. Connection fees for hooking up to the sewer and the water. You've got your costs for actually having the work done to hook up to the sewer and the water. So this is the excavator putting in laterals and the like. You've got your driveway and that about covers most everything that's needed to basically connect your home to a subdivision lot.

The approximate cost to prepare a lot for building a house in a fully improved subdivision is about $13,000-$20,000 on average and that includes all of the building permits, concrete driveway, the survey work, fencing around the job site, the sewer and water hookups. Aside from the actual lot cost and home building costs. The other scenario is if you're going to be building out a lot that has fully improved minus it doesn't have water. So there's a lot of neighborhoods that will have sewer but they don't have water run to it. So in that case you're going to take an add about $10,000 to $12,000 on top of the $13,000- $20,000 for a well. The well alone will cost on average $10,000. Then you are also going to have a reverse osmosis drinking water system that needs to go in, a water softener, possibly an iron filter depending on the strength of the the minerals in the water.

Scenario number three is building on raw land. So this is just you know we're building out a farm field in the woods somewhere where there's no sewer and with no water. There's gas and electric but it's way out at the road and you want to be you know 150 feet off of the road, well in that case I put an average of about $40,000 for those raw land improvement costs.

Every village or town or municipality have their own separate permitting costs. As a general rule of thumb if you're going to be building a house in a subdivision on an improved lot, just figure that the build cost is going to be about $24,000 more if you're building on a piece of raw farm land as opposed to a fully improved subdivision lot. Then if you compare building on a fully improved subdivision lot that doesn't have water compared to a fully proved subdivision lot with water, that build cost overall is going to be between much more.


Contingency Amount for New House Build

One line item for costs many people forget is something called a “contingency amount.” So when it comes to properly budgeting for a home building project, no matter what the size is, you must have a contingency price included in the estimate, and ultimately in the construction contract.

A contingency price, or sometimes referred to as a contingency allowance is a line item cost that represents a small percentage (usually 3-15%) of the total cost of the construction project. That money then is “set aside” for ALL unforeseen problems associated with the project.

So when it comes to protecting yourself, never sign a construction contract without a contingency price.

Other Fees in New Construction to Consider

If you're planning to build a home be prepared to face constant changes in rising costs of impact fees. Some areas of the country you will be surprised that there's even a labor shortage. Building may be your only option in what is turning into an affordable housing shortage, it's all about supply and demand. In some markets, there are not a lot of properties either resale or new construction available in the market and there are a number of buyers.

In general, it typically takes six to nine months to build a home. That's if you've purchased the land. Some area have only limited land which can drive the price of lots. For a 3,300 square foot home expect to pay around $6000 or more for such things as water sewer parks and recreation fees. For the same house you can expect to pay upwards of $4,000-$8000 for electrical connection fees. Then there are building permits which cost around $1700 for a 3,300 square foot home. Building permits costs vary from state to state. Don't forget the inspection costs as well.

Before you even start construction on a home with land and regulation costs you need to know it's a huge percentage of the home. That cost can be $20,000 alone.
So as you can see the average price of building a home can vary a lot. Cost estimates can also range depending on local materials and labor as well. There are home construction loans that offer help in the building costs too.

Thanks for reading how much does it cost to build a house. Don't forget the time frame time frame final cleanup on your dream home build.

Local Realtor list I can recommend below.

For the Charlotte, NC area I recommend Debe Maxwell, CRS 

For the Warner Robins, GA area I can recommend Anita Clark 

For the San Jose, California area I can recommend Kathleen Daniels 

For the Barrington, Illinois area I recommend Corinne Guest 

For the Franklin, Massachusetts area I recommend Barbara Todaro 

For the Tallahassee, Florida market I recommend Fred Griffin 


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Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

This was an excellent blog choice to reblog, Elizabeth.  It's a treasure trove of valuable information.

Jun 23, 2018 03:34 PM #1
Debbie Reynolds, C21 Platinum Properties
Platinum Properties- (931)771-9070 - Clarksville, TN
The Dedicated Clarksville TN Realtor-(931)320-6730

Prices are going up on new homes. Just since the first of the year some increases in products are at almost 30%.

Jun 24, 2018 02:39 PM #2
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