November 17, 2021


When you are thinking about building a new home, there are multiple factors that need to be taken into account. One of the first questions to ask yourself is: how big do you want your new house to be? If you want a small house, the cost will be very different than if you want a large house with five bathrooms and a pool. 

The good news is that you can consider all of the various factors involved in the process and estimate the costs involved before you begin the process.

Read on to learn everything you need to know about how much it costs to build a house and what goes into building a house to decide what best suits your needs, budget, and lifestyle.

What Is The Average Cost To Build A House?

Image credit: Al Jazeera

What Is The Average Cost To Build A House?

Money is an important factor when you are looking to build a house. With the current hot real estate market, let’s consider the current averages of how much lighter your wallet will be after you build your own house. According to the National Association of Home Builders (NAHB), the average cost of a new home is $296,652, or $114.36 per square foot. Depending on the location and size, you're looking at spending between $200,000 and $300,000 to build your average three-bedroom home. 

Keep in mind that the costs will also depend on whether you’re building a custom home and what features you want in your house.

National Average


Minimum cost


Maximum cost


Average cost range

$150,000 - $445,000

Seven Steps To The Home Building Process

Building a house may sound complicated, but the costs can be broken down into the following six areas.

1. Plans And Permits

Plans And Permits

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Building permits, inspections, and other costs for site construction range from $5,000 to $6,500 on average. In addition, the government will also levy a regulatory fee. 

Depending on the size of the house layout, types of permits, and preliminary inspections, you should budget $18,000 on average for plans and permits.

2. Foundation Costs

Now that you are done with your permits and inspections, it's time to build. The building process starts with digging out a space for your foundation.

The foundation can cost as low as $50 per square foot for a concrete block basement to as high as $200 per square foot with poured concrete. 

The cost of labor also affects the amount it costs to build a foundation as you will need specialized machinery and equipment such as concrete saws, jackhammers, and drilling rigs.

Set aside $35,000 on average for your foundation.

Foundation Costs

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3. Framing Costs

After the foundation, you will need to frame your walls and floors. Framing your house involves creating the base of your home by nailing wall studs to the floor. This skeleton is what will hold the walls, windows, doors, wiring, plumbing, and the roof of your home. 

The cost of having a house framed mainly depends on the size and type of building you intend to build, materials that are used, the general contractor's reputation, and experience. 

Estimate the cost of framing your house by square footage:


Cost Per Sq Ft

Hardware (nails, hangers for the trusses, etc.)



$5-$10, depending on the type of wood

Labor and lumber

$9-$21, depending on the type of wood


4. Exterior Finishes

Your beautiful new house is starting to come together. What’s next? 

It is time to start putting the exterior finishes on your home. Exterior finishes are the skin and protective layering of your home. This can include vinyl siding, brick, wood, glass, etc.

Exterior finishes can cost up to $40,000 - $60,000.

The following are rough estimates to help you ballpark the costs.

Exterior Siding

Cost Per Sq Ft








5. Interior Finishes

Interior finishes are vital to the design element of a home. The materials you decide to outfit the interior of your home with are subjective to your taste and the current style trends that appeal to you. This includes adding insulation, drywall, flooring, and interior doors.

On average, the price range of interior finishes is between $50,000 to $175,000.

6. Installation Of Major Systems

One of the mistakes made by first-time homeowners (or sometimes even those with an existing home) is overlooking essential systems that your home will require. The cost of a new HVAC system might range from $1,650 to $11,000, while the total cost of installing other major systems ranges from $30,000 to $75,000. The majority of your crucial system costs are made up of plumbing and electricity. The size, type, and warranty of systems used influence the cost of these installations.

7. Labor Costs

 Labor Costs

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The home building process involves a team of professionals. Keep in mind that it is better to work with reputable professionals in the industry for the best results. In most circumstances, if you hire a builder, they will be supervised by various professionals working on the project. Most laborers bill by the hour, but some charge based on the complexity of the project or the square footage of the house. 

According to, the following are labor costs associated with new home construction:
  • Architects — 10% to 17% of the total building budget
  • Structural engineers — $100 - $500/hour
  • Plumbers — $45 - $200/hour
  • Electricians — $40 - $100/hour
  • HVAC — $50 - $70/hour
  • Landscaping — $45 - $75/hour
  • Concrete workers — $110/cubic yard
  • Flooring installers — $5 - $20/sq.ft.
  • Painters — $50/hour
  • Roofers — $1.00 - $1.50/sq.ft.
  • Carpenters — $70/hour

Top Questions To Ask When Building A Home

The following are some of the most important questions to consider.

How Will The Square Footage Of The Home Affect Construction Costs?

The square footage of the new house you are trying to build directly and significantly affects the price you pay.

First, let's define what is meant by "construction costs per square foot". This is the total cost to construct a house, divided by the square footage of the house. The average cost to build a house is $150 per square foot.

To simplify the process, find the closest square footage for the size of the house you want to build in the chart below. This will help you get an estimate of how much it will cost to build a house.

800 square feet

$80,000 — $160,000

900 square feet

$90,000 — $180,000

1,000 square feet

$100,000 — $200,000

1,200 square feet

$120,000 — $240,000

1,500 square feet

$150,000 — $300,000

1,600 square feet

$160,000 — $320,000

1,800 square feet

$180,000 — $360,000

Source: Home Advisor

Does The Number Of Rooms In A House Affect The Cost?

The entire cost of building a home is determined by several construction factors, one of which is the size of the home. On average, larger houses cost more than smaller houses, which may be expressed in two ways: the number of bedrooms and total square footage. 

Keep in mind that the number of bedrooms in a home does not always correspond to its overall size. Also, consider that the more bedrooms a property has, the more baths, the larger the garage, and the more common areas it will have, the higher total costs.

A one-bedroom home costs roughly $195,000 to build. The average size of a one-bedroom home is around 1,200 square feet, which is smaller than the average dwelling. This indicates that you can build a 1-bedroom home for less money than a larger residence. On the other hand, the median price of constructing a two-bedroom home is $305,000. Regardless, if you want more rooms (that are bigger in size), then your costs will go up.

How Does Location Affect My Overall Costs?

Home construction costs can vary greatly depending on the location. Building a new house in more expensive areas like New York and Los Angeles can cost around $60 to $70 per square foot, while in regions like Oklahoma or Texas — it can cost between $30 to $50 per square foot. The chart below is a rough estimate of how location greatly affects costs.


$135.10 per square foot 


$116.37 per square foot


$92.56 per square foot


$151.88 per square foot

Source: U.S. Census Bureau

What Will My Home Customizations Cost?

The cost of customizing your house depends on the type of home you want to build and the extent of customizations needed. The costs can range from $100,000 for minor, one-time renovation work to $1,000,000 for extensive remodeling that involves structural changes to the home.

It's important for homebuyers to factor in all costs related to a renovation project before deciding which work to do. The costs of remodeling a home can include:

  • Site preparation and demolition prior to construction, such as clearing trees
  • Conditioning ductwork
  • Drywall finishings
  • Painting walls
  • Paneling flooring
  • Wood cabinets in the kitchen
  • Countertops and flooring

How To Minimize Costs When Building A New Home

It is important to note that home building costs can be a major hurdle for many. Many people are not well-versed in the construction industry and lack the knowledge of negotiating for the lowest prices.

To minimize costs, do your research on the materials required to build your house. They can be purchased from manufacturers, wholesalers, or directly from suppliers, but it is important to find the best discounts and deals. While purchasing these items, there are a few important factors that you must consider.

The Price Of Building Materials

Before buying the material, home builders should check whether there is any discount or rebate offered on the items. You can also take the help of sales representatives who will guide you when it comes to pricing and other details before purchasing.

Buying Materials In Bulk

When you buy a large number of building materials, you have a lot more negotiating leverage to get the cost of all the materials at a discounted rate. If you have the capital to buy your materials in bulk, definitely take advantage of the cheaper costs.

Place Of Purchase

In some cases, pricing varies from one place to another due to transportation costs and other factors. Call and ask for quotes from at least three different places to compare prices. 

If you are working with a reputable contractor, they will be able to help you with this process and even apply some of their own discounts if they’ve been doing business in the area for a while. Take your time before hiring a contractor and ensure that they can complete the project within the estimated cost. Make sure to ask potential contractors about their price list, previous projects, and testimonials from customers.

In addition, it is important to talk about the quality of materials that will be used in the construction along with the unit prices when negotiating. Ask them for an estimate on how much money you will have to spend on the following:

  • Concrete — This is a costly component of site work, but various construction techniques can reduce the cost.
  • Roofing materials — This includes shingles and metal sheets. You can find the best deal at local building supply stores that also sell roofing trusses in bulk.

After choosing the right general contractor and getting material at the lowest price, you can ensure that your house construction project is a profitable investment.

The Bottom Line

The Bottom Line

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Building a house is likely one of the most expensive investments you will make in your lifetime. But, it doesn't have to be overwhelming or intimidating if you know what to expect and how much everything will cost.

Start doing intensive research, speak to those who have built homes in the past, and have patience! Dream homes are not built overnight, but once your project is complete, you will be so glad you made this decision. Good luck!

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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