November 9, 2021


Building a house is one of the most significant emotional and financial decisions you can make. After all, it’s where you and your family will spend most of your time together. Hopefully, when you build a new house it becomes your forever home where you can share a lifetime of memories. Sadly though, building a house isn’t free. Oh, you knew that already, didn’t you? 

So, how much does it cost to build your own home? Frankly, it can be costly, but that shouldn't deter you from doing it. With the proper knowledge at the start, building your own house can indeed be a dream come true. The key is understanding what you and your family need and then researching to understand the actual building costs.

The True Cost Of Building A House

Like most things, the cost can vary greatly depending on the type of home you want and where you want it to be. As you could likely guess, a home in the middle of Manhattan won’t have the same value as a home in the middle of the county, even if they are the exact same house. 

Beyond location, the price of the actual house can vary based on several factors, including the materials you use, the labor costs you incur, and a slew of other factors. With all this variability, it's essential to understand precisely what type of new house you want and where you want it to be before genuinely understanding the price. 

You’ve probably already researched the benefits of building vs. buying a house. When you buy an existing home, the price is pretty straightforward. When pricing the building of your own home, unexpected costs will almost always arise, making the price a little vague at the start. 

That said, some general guidelines can give you a sense of what it costs to build a brand new house. For example, square footage is a crucial factor. A 2,000 square foot house is probably going to cost less than a 5,000 square foot house. 

It makes sense, right? Considering price per square foot is more useful if you compare different house plans during the home building process. 

Without knowing all the variables of your specific home build, looking at recent trends in new construction costs around the country can also provide a good starting point.

Average Cost To Build A House

According to HomeAdvisor, the average cost to build a house is $285,102, and most homeowners spend between $120,735 and $452,335. These statistics represent average costs, not median price, meaning there are some expensive homes and some very inexpensive homes pulling that average in each direction.  

The average cost of building a house varies greatly depending on the specific housing market you find yourself in when looking to build. For example, 2021 has been primarily a seller’s market - when inventory doesn't meet demand and the average sales price for new homes soars. 

When prices are high, the amount builders can charge for home construction costs goes up as well. This is because a high sales price is a function of what people are willing to pay. When existing houses are priced high, people are willing to pay more for newly constructed homes as well. This, along with supply chain issues throughout the country, resulted in rising material costs and has made this a particularly expensive year to build a new home or buy an existing house

The past year shouldn't turn you off from building a new house entirely, but it serves as a good reminder that being aware of current real estate market trends will help you make the most informed decision possible.

New Home vs. Existing Home


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Most people looking to build a new house at some point weigh the pros and cons of new vs. existing home purchasing. Knowing the price of an existing home compared to the construction costs of the home you are thinking of building can be helpful. 

First, this comparison will help you decide (or affirm) that building your new dream home is the correct route financially. Second, it will give you a sense of what your newly constructed house will be worth once it’s finished. 

To that end, let’s look at statistics from March 2021 (the height of the spring housing market)  and compare new and existing home prices. CNBC notes that according to the U.S. Census, the median price of a newly constructed, single-family home was $330,800. According to the National Association of Realtors, the national median price of an existing, single-family home sold in March was $334,500.

Many people think building a brand new home is more expensive than buying an existing one, but these numbers dispel that myth to some extent. In many cases, as you can see, building your dream home can be less expensive than settling for the best existing home available.

The Cost To Build A Small House


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As we have covered, when it comes to the cost of building a home, less is more. Tiny houses and container homes have been gaining popularity recently. According to Business Insider, tiny homes gained popularity during the coronavirus pandemic, and 86% of people who had not yet owned a home said they would contemplate purchasing a tiny house as their first home.

But is owning a tiny home right for you? Well, if you have a large family, probably not, but if it’s just you and your partner, it might work.  Space is at a premium when living in close quarters, so make sure you are living with someone you really get along with.

Tiny homes can be good for people who like to travel a lot as well. If you’re not home all that much, why spend a lot on an expansive house?

The other reason a tiny home may be right for you is if you like to cut costs. When it comes to the average cost of building a home, it comes down to price per square foot. When you compare the cost of tiny houses (such as the cost of a frame house) and more conventionally sized homes, the prices are tens of thousands instead of the hundreds of thousands. 

While the overall cost is almost always less than a traditional home, tiny houses can vary significantly in price. According to CNBC, the average cost of a tiny home is $52,000, 87% cheaper than the average price of a typical home. Buyers, however, are paying more per square foot for tiny homes - 62% more to be precise. 

So, even though the price per square foot will be more for a 300 sq. ft. home than a 3000 sq. ft. home, the overall price will be much less. In addition, smaller homes are less expensive to heat and cool, saving you money on monthly utility bills . They are also less likely to have costly repairs, allowing you to save even more. 

The Cost Of Building A House On Your Own Land


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Buying land to build a house is a complicated process. If you are looking at new homes in housing developments - where a developer buys a large parcel of land and then splits it into smaller lots, the land will be included in the price of your new home. However, if you are determining the ideal site for your dream home, you should employ the services of a real estate agent to assist you.

A local real estate expert can determine the average cost for vacant land, discuss your specific preferences with you, and find the best possible parcel for you to buy. They will also understand the local and national trends regarding the average price of vacant land.

When it comes to vacant lot costs, it is critical to understand the value of your specific location before purchasing the property and breaking ground to build your home. This varies so much by area that you need to first look at the land values in your state, then your town or city, and finally the specific neighborhood where you will be building. 

According to USA Today, an acre of land is valued at less than $2,000 in the least valuable state and goes for more than 100 times that in the most valuable state. A deeper dive into the estimated land value in each of the contiguous 48 States will give you at least a starting point for determining what you should pay for your land.

Land Values State By State

Here are the land values in each of the 48 contiguous states based on price per acres. They are ranked from the least expensive to the most expensive:

48. Wyoming: $1,558

47. New Mexico: $1,931

46. Nevada: $2,116

45. South Dakota: $2,135

44. Montana: $2,283

43. North Dakota: $2,517

42. Nebraska: $2,936

41. Idaho: $3,435

40. Kansas: $4,220

39. Arizona: $4,328

38. Utah: $4,664

37. Mississippi: $5,565

36. Maine: $6,142

35. Colorado: $6,462

34. Oregon: $6,503

33. Iowa: $6,590

32. Arkansas: $6,739

31. Kentucky: $7,209

30. Missouri: $7,233

29. Oklahoma: $7,364

28. Vermont: $7,439

27. Texas: $7,542

26. Minnesota: $8,191

25. Wisconsin: $9,924

24. West Virginia: $10,537

23. Washington D.C: $12,356

22. Louisiana: $12,908

21. Georgia: $14,242

20. Tennessee: $14,411

19. North Carolina: $16,230

18. Washington: $16,752

17. Indiana: $16,903

16. South Carolina: $17,610

15. New Hampshire: $19,840

14. Virginia: $21,921

13. Illinois: $23,492

12. Michigan: $23,765

11. Florida: $28,961

10. Pennsylvania: $31,923

9. Ohio: $32,077

8. California: $39,092

7. New York: $41,314

6. Delaware: $57,692

5. Maryland: $75,429

4. Massachusetts: $102,214

3. Connecticut: $128,824

2. Rhode Island: $133,730

1. New Jersey: $196,410

Hopefully, this gives you a good starting point in understanding the value of land in the state where you are thinking about building your new home. Of course, the more narrowing down you do, even down to a specific neighborhood block, the more accurate your land value estimate will become.

Clearing The Home Site

Building a house on your own land also means being responsible for preparing the parcel before you break ground and begin the home construction project. This includes removing trees, shrubs, roots, and stumps from the eventual home site.

So, how much money do you have to budget for this? According to Fixr, the national average cost for clearing land to build a home is $3,500. The average range is $1,600 to $8,000, with a  minimum cost of $1,000 and a maximum of $12,000. 

Remember, if you are buying a new tract home or a townhouse in a subdivision, the land is already included into the home cost, but it's up to you to pay for it if you are building on your own land.

How Much Does Building A Custom Home Cost?

According to HomeAdvisor, custom homes average from $350,000 to $1.5 million or more and usually range from $300 to $500 per square foot. As you might imagine, the selection of materials and finishes impact these numbers quite a bit. 

A luxury home adorned with quartz or granite countertops, hardwood flooring, custom cabinets, and other luxurious finishes will be pretty pricey. A more humble approach with low-end finishes like laminate floors and standard cabinets will cost considerably less.   

Custom homes are also more expensive than tract or subdivision homes because of the special material ordering and labor needed. Other factors include the discrepancy in the land costs and unique floor plans that often accompany the construction of a custom home.

Developers get discounts on land when they buy a large amount of acreage and then subdivide it into smaller lots. In addition, they save on building materials and other home products when they buy in bulk. 

Custom homes require more unique materials, so the order size is smaller, usually just enough for your own house. This means the price for materials will be higher, and the overall home construction budget will be more significant. 

When it comes to labor costs, the unique nature of your custom home requires more work and subsequently more cost. For example, installing a pre-made cabinet from IKEA takes considerably less time than crafting and installing a custom-made cabinet. Price ranges vary depending on the amount of customization.

What Is The Specific Cost Breakdown Of Building A House?

Now that you have the overall project costs of building a few different types of homes let’s get you a better understanding of what each specific part of the home building process costs. Here are home costs for each phase of the building process, according to HomeAdvisor.

Building Permits

Depending on the number of permits you need to pull, budget between $1,200 and $2,000 for permit costs. If you are only looking to get a building permit, the price will be lower. If you need a specific permit for grading or other specialized needs, the cost goes up. Keep in mind that this cost can vary depending on area-specific permits requirements.


Representing about 50 percent of your total building budget, material prices heavily depend on the type you choose. For instance, inexpensive vinyl, wood, or aluminum siding will be about $2 to $5 per square foot. On the other hand, high-end stone will cost about $35 to $50 per square foot. Here’s a cost breakdown of some of the most commonly used building supplies.

  • Lumber: $25,000 to $65,000 total
  • Concrete: $1,000 to $10,000 total
  • Drywall: $10 per sheet
  • Flooring: $1 to $5 per square foot
  • Siding: $2 to $15 per square foot
  • Insulation: $0.10 to $1 per square foot
  • Roofing: $1,000 to $3,000 total


The cost of hiring home builders to do the work for you will take up 30 to 60 percent of your total construction budget. Some of the common labor costs include:

  • Construction Manager: $3,150 to $50,000 or 5% to 15% of the total project cost
  • Framer rates: $7 to $16 per square foot
  • Electrician rates: $50 to $100 per hour
  • Plumber costs: $45 to $200 per hour
  • Roofing costs: $5,000 to $10,000 total


Digging and pouring the foundation will cost around $4,000 to $25,000. This includes excavating the building site, pouring the footers and other concrete or laying the block, and then backfilling the remaining soil.


Framing the home starts with erecting the initial home frame, trusses, and metalwork. Next comes the installation of the sheathing, subfloor, windows, and doors. All of this work will cost between $20,000 to $50,000, depending on the design and size of your home.

Plumbing, Electrical & HVAC System

Perhaps the most critical components of your home, the electrical, plumbing, and HVAC systems support the everyday actions of your life. Think about all the things you could do without water, heat, and lights? It's a short list, isn't it? 

Given their relative importance to home construction, these items are reasonably priced between $30,000 and $75,000. Here’s a more specific breakdown of major system costs:

  • Rough-in plumbing costs: $7,000 to $15,000
  • Electrical wiring: $20,000 to $30,000
  • HVAC costs: $1,500 to $13,000

Exterior Home Finishing Costs

Critically important for both function and style, exterior finishing costs range between $40,000 and $60,000. This includes, at a minimum, roofing and exterior walls. It also includes windows and doors, with the more you have resulting in more expensive costs. Here’s a more specific cost breakdown of each:

  • Roofing installation: $5,600 to $11,500
  • Windows: $3,000 to $9,300
  • Exterior painting: $1,800 to $4,400

Interior Home Finishing Costs

Interior finishes have a significant cost range given the nature of their variability. You can reasonably estimate between $50,000 and $175,000, but costs can get much higher depending on your budget and taste. This covers pretty much everything inside the home, from countertops and toilets to light fixtures and interior doors. It also includes major appliances and a finished basement if that is part of your plan.

Building A House On A Budget

If all of these price estimates are making you cringe, fear not! There are many ways to cut some of the total costs. Check out this article on the cheapest way to build a house for tricks of the trade that will help you get your dream home without ending up in a financial nightmare. 

The opportunities for saving during your home-building journey can be found at every turn. The keys are figuring out what you can do yourself to save on the price of labor and selecting materials that don't break the bank. This goes for everything from the major systems to the finishing touches.

Summary: Knowing The Cost Of Building Is Key

Financial advice is always a good thing when taking on a big project, so think about what you have read here about the cost of building before breaking ground on your new home. New construction is a complicated endeavor, with upfront costs that can stress the family budget. Understanding what to expect is the key to making sure you end up getting the home you want at a price you can afford. 

About the Author

As a native Washingtonian, Carlos Reyes’ journey in the real estate industry began more than 15 years ago when he started an online real estate company. Since then, he’s helped more than 700 individuals and families as a real estate broker achieve their real estate goals across Virginia, Maryland and Washington, DC.

Carlos now helps real estate agents grow their business by teaching business fundamentals, execution, and leadership.

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