How Much Does It Cost to Build a House?
Aug 28, 2019
Are you convinced that the only way to get the house you want is to build it from scratch?
If so, you should know that there are a number of steps involved.
The first is simply understanding just how much it costs to build a house.
3 Costs of Building a House
It’s impossible to say exactly how much it costs to build a house because of all the different variables involved.
However, in 2017, the National Association of Home Builders (NAHB) found that the average price for building a new home was $427,892.
On the other hand, the current average price for a single-family home is just $288,500.
Obviously, that’ a big difference.
This is for three main reasons.
1. Making the Plans for Your New Home
Most people enjoy occasionally fantasizing about what they would include in their dream home if they could build one from scratch.
Of course, if you’re planning on building a new house, you actually get to go through the process of putting a completely unique plat together.
Except, even if you choose every last fixture yourself, you still need a professional to actually create the detailed plans. Their expertise is essential for ensuring that the builder can execute those all-important plans correctly.
Like the other costs on this list, the price of hiring a draftsman depends on what you have in mind for your home.
However, the variation isn’t quite as much. Most draftsman charge between $100 and $130 an hour. For a 1-2 bedroom house, expect to pay $400 to $1,500. For 4-5 bedrooms, you’ll spend anywhere from $1,200 to $3,000.
If you want a new home but don’t need it to be one-of-a-kind, you can always purchase a preexisting plan and then pay a draftsman to alter the blueprint as you so desire. That would cut costs significantly.
2. Buying Your New Home's Lot
That said, you can’t build a home without something to build it on, which means you’ll need to first purchase a lot before construction can begin.
If you’re building your home in a preplanned community, you might be able to purchase your lot directly from the contractor who will simply include the cost with the rest of their fees.
Otherwise, you’ll buy the lot separately and then hire a contractor to build your home.
Either way, the cost for the actual lot is substantial, though it differs greatly from one neighborhood to another.
As recently as 2015, the USDA estimated that the average cost for an acre of land was $3,020. That amount has most likely increased since then, though.
Last year, NAHB reported that, “Average New Lot Size Remains at Record Low.” While there are probably a number of ways to explain this continuous drop, one obvious culprit is simply that as more land has been bought up, less remains, demanding a premium price.
Furthermore, it’s important to remember that simply purchasing a lot usually isn’t enough to begin building a new home. A work crew generally has to prepare the land for construction first.
Usually, this entails clearing the lot of vegetation, large rocks, and any other natural barriers that would stand in the way of building a house. Workers need to check for potential “invisible” problems, too, like buried roots.
They may also need to grade the land, stake the area where the home will be built, connect the lot to the electrical grid, and much more.
Just like the actual lots themselves, this type of initial work comes with a price that can be difficult to predict. Typically, clearing an empty lot will cost somewhere between $1,250 to $4,200, but again, it varies. You might find that a few hundred dollars is enough. Alternatively, you could need to spend closer to $10,000.
3. Building the House
Here’s where the costs really start piling up.
Now, that it’s time to break ground, you’ll need to pay for the following services:
- Site Work – Estimated Cost: $16,000 – This covers everything from site inspections to permits to the “impact fee” you need to pay to the government.
- Foundation – Estimated Cost: $26,000 – Before starting on your home, you need excavators to break ground and then use lumber and concrete to build a reliable foundation. The price goes up if the foundation needs to support a basement, too, as it will require digging much deeper into the earth.
- Framing – Estimated Cost: $41,000 – Constructing the framework of your home is an important job, one that costs a lot because of the lumber involved. It also entails “sheathing”, which is when wooden layers are added to cover the framework. If your plan involves using other materials, like steel, you can expect a higher price tag.
- Exterior Finishes – Estimated Cost: $33,000 – It takes a lot of material to cover your new home’s perimeter. This material is especially important, too, because it’s what stands between you and the elements. This is also when all of your doors and windows are added, another necessary step that can be extremely costly.
- Major Systems Installations – Estimated Cost: $33,000 – A modern home needs an HVAC system, electrical, and plumbing. Simply installing these systems – not the actual fixtures – requires skilled labor and long hours.
- Interior Finishes – Estimated Cost: $68,000 – This is when all of your fixtures and features get added. Hardwood floors, faucets, countertops, cabinets, fireplaces, etc. There’s a lot that falls under this category, which is why you can easily spend close to $70,000 making your new house feel like a home.
Again, this is only a rough estimate of how much it costs to build a house. Also, keep in mind that it’s an estimate at the lower end of the spectrum. It wouldn’t be hard to spend significantly more.
The above estimate isn’t even the total, either.
There’s still the sales price to consider. As you’re buying a brand-new house, the actual price is up to the builder and any vendors involved. After they add in a number of line items, you’ll still need to pay for general expenses, financing, marketing costs, the sales commission, and perhaps a few other surprising fees.
All said, you’ll have to budget for another $190,000 or so to purchase your home once it’s built.
The Perfect House May Already Be Out There
Or you could consider what’s already available.
If your heart is set on a new home, don’t worry. There are usually plenty of brand-new homes on the market that don’t cost nearly as much as building one from scratch.
Even better, if you buy a new build through SimpleShowing, you’ll enjoy the benefits of our Buyer Refund program, which will give you up to $15,000 back at closing.
Contact us today to find out more about how we save customers money on new construction.