How Much Does It Cost to Build a House?

Construction costs in the US have increased significantly in recent years. Homebuilding costs have consistently jumped, from raw materials to labor, adding to the current cost-of-living challenges facing the nation.

How much does building a home from scratch cost in today’s economic climate?

How Much Does It Cost to Build a House?

Data from HomeAdvisor show that the average cost to build a house in the US is more than $320,000 for a single-family home. Of course, this does not include the cost of land – which is a considerable amount – but rather the overall construction: labor, materials, finishes, and other associated costs.

Prices per square foot, meanwhile, vary according to location. That said, in general, the HomeGuide figures highlight that the cost of new construction per square foot in the Northeast region is approximately $155. This goes down to $131 for the West, $109 for the Midwest, and $100 per square foot in the South.

Ultimately, the cost of a 2,000-square-foot home in the South could cost homebuyers approximately $200,000, but the same house will cost about $310,000 in the Northeast. Mississippi is the cheapest state to build a home, coming in at approximately $287,670). Conversely, Hawaii is the most expensive at $431,364.

Hawaii is expensive primarily because of its high land costs and the higher cost of materials transportation. Houses also need to meet certain basic foundation standards due to the higher risk of hurricanes. The island state also has complex zoning regulations and permitting processes, a problem also observed in California and Alaska.

Breaking Down Housing Costs

The core items that account for the total construction cost of a house in the US real estate market? Here is a breakdown:

• Excavation
• Foundation
• Roofing
• Lumber
• Heating
• Plumbing
• Wallboard
• Drive and walkway
• Wiring
• Painting
• Flooring

Indeed, these items are over and above the cost of land. As far as land is concerned, the cost can again vary by location. On average, estimates suggest that homebuyers, whether first-time or seasoned households, could spend up to $150,000 on land acquisition alone. This is followed by the expenses related to permits, architects, engineers, and all essential services you will need if you want a solid plan for your house.

While materials contribute significantly to the average effort of homebuilding, labor is another factor that is often ignored. Industry estimates suggest that labor accounts for as much as 50 percent of the total home construction cost. This cost is determined by how complex the construction is and the amount of work that is involved. Still, you cannot successfully build a house without a long list of experts, such as contractors, roofers, plumbers, painters, and electricians.

So, how does this break down? Well, site work and foundation of the house make up approximately 18 percent of the total construction cost, while framing and exterior finish make up 30 percent. Plumbing, HVAC, and electrical systems typically account for one-fifth of the total construction expenditure. Interior finishes, without which the home cannot be livable, account for nearly one-quarter of the total cost.

It should be noted that costs can further increase if the house you are building has extensive plans related to landscaping, driveways, and other outdoor structures.

And then it comes down to the brass tacks.

It is important to remember that there are also non-construction costs (other than land) that prospective homeowners must keep in mind. These will generally include financing costs, general expenses, and the builder’s profit. No matter where you are building the house or how big it is, there will be administrative expenses, legal fees, and associated costs like insurance. Mortgage-related financing costs.

Explore the US Housing Market

In the end, before you ask yourself how much it costs to build a house today, it might be a good idea to search the market and opt for an existing property. However, this might be a bit challenging today as many homeowners do not want to give up their comfortable mortgage rates and low-priced houses.

Of course, nobody will argue that there is no match for building your own house. However, it might not be feasible if you do not have the financial resources and management expertise to handle such a big undertaking. Costs to buy the land, build the home, hire the labor, and obtain permits and financing all add to the overall price tag.

Can you afford it? If you still have the budget, follow through on this journey. However, if putting together a down payment and saving for a home was difficult, maybe it is best to avoid the hassle of homebuilding and buy an existing home.