How Much Does It Really Cost to Build a House?

New homes are expensive, so it's important to know how much it costs to build a house before you speak to builders.

The national average cost to build a house is about $520,500. The cost of building a house is highly variable, dependent on the cost of land, total square footage, permits, and extra fees.

Cost Variations

While it's generally more expensive to build a house than to buy an existing house, building a house offers flexibility, customization, and fewer maintenance duties.

The cost to build a house ranges from $506,860 to $534,300, for an average of $520,500. That's for an average-sized home of 2,560 square feet.

Building costs vary, though, depending on the cost of the land, builder's fees, the size of the house, and the house's design and style.

Some costs are non-negotiable, such as the contractor's mark-up, builder's sales fees, and permits. Other costs are flexible, like the choice of materials and fixtures, size of the house and the lot, and the type of layout.

Cost of Land and Construction

The average cost to construct a house is $392,240—land not included. A 0.4-acre or 17,220-square-foot lot costs $114,620, on average. Combining the cost of the land and the construction brings the total cost to $506,860.

Cost of Builders' Fees

Extra sales costs may come into play when working with some home builders. With these types of purchases, the sales price will be higher due to builder-related costs for overhead, marketing, sales commissions, and profit.

These extras total $137,900, bringing the overall cost of building a house to $644,750.

Cost Per Square Foot

The average cost to build a house is $203 per square foot.

The cost of constructing a house is $153 per square foot. That's the cost of construction only, not including the cost of the land or builder's fees.

Cost of Land

The average cost of land for building a house is $6.70 per square foot. This is the raw cost of the land only—no structures. On average, a 0.4-acre or 17,220-square-foot lot costs $114,620.

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The cost of land varies across the U.S. Land in Mississippi, Alabama, and West Virginia costs from $2 to $3 per square foot. Land in Michigan, New Mexico, and Wyoming costs about three times as much.

Cost Per Room

When determining how much it costs to build a home, it's helpful to break down the total price into per-room costs. That way, it's possible to increase or decrease the size of rooms to move the dial on the house's overall total cost. Or, you can add or remove entire rooms, as needed.

For example, with an average-size bathroom costing over $12,000, it might be worthwhile scaling down its size if you're operating on a reduced budget.

On the other hand, a small- or average-size kitchen costs just over $20,000. If a full-size kitchen with all the amenities is important, it might be worth increasing its size.

Cost Factors

A vital point when learning how much it costs to build a house is that some categories cost more or less than others.

For example, interior finishes cost $94,300 and comprise close to 24-percent of the cost of building a house.

Interior finishes cost so much because it is such a broad category including insulation, drywall, trim, doors, painting, lighting, cabinets, countertops, appliances, and flooring.

Framing the house costs $80,280.

After framing, electricians, plumbers, and HVAC crews build out the major systems at a cost of $70,150.

House Building Breakdown

Breaking down the cost of building a house reveals where most of the money is spent: electrical, plumbing, interior finishes, and foundation work.

Electrical work costs about $24,000, or about six-percent of the total building cost. Likewise, plumbing work costs close to $24,000.

Of that costly interior finishes category, cabinets and countertops cost close to $18,000 or about 4.5-percent of the total building cost. Higher-end quartz countertops alone range from $2,120 to $5,960 per installation. To save costs, laminate countertops cost from $14 to $38 per square foot or about $560 to $1,520 per installation.

Foundation work such as grading, excavation, foundation building, concrete pouring, retaining wall building, and backfilling collectively costs close to $40,000 or about 10-percent of the cost of building the house.

Average Cost by State

The cost to build a house varies state by state and region by region. Availability and cost of building materials, the cost of labor, and climate are a few of the factors that influence the cost of building a house per state.

How Long It Takes to Build a House

Generally, it takes around four to six months to build a house.

Some houses take from seven to nine months to complete. A few outlier houses are built in less than three months. Some houses can take a year or more to build.

Cost to Build New House vs Buy a House

From a cost perspective only, it's better to buy an existing house rather than build a new house. An existing home costs $195,530 less than the cost of building a house.

The median price for an existing house is $324,970.

At a full sales price of $644,750 (including the builder's fees), a newly built home costs about twice as much as a new home.

On top of that, buyers of new homes tend to spend nearly twice as much for appliances, furnishings, and property alterations than buyers of existing homes.

How to Save Money Building a House

Given the high cost of building a house, it's worth looking into ways to save on costs. Here are several ways to save money when building a house.

Pare Down Its Size

All other factors equal, the size of the house has a direct bearing on the cost of the house. Reducing the size of the house will lower the cost to build it.

On average, for every 100 square feet you reduce the size of the house, the overall cost decreases by $20,300.

Choose a Simple Layout

Houses with simple floorplans and rooms with conventional elements will help you save money on the cost of building a new house. Features like wet rooms, walk-in showers, dedicated game rooms, or home theaters add to your enjoyment—but add to the cost, as well.

Do Some Work Yourself

Homeowners can save money on the cost of building a house by doing some of the work by themselves. Commonly called sweat equity, homeowner-driven labor can substantially reduce costs by also reducing contractor fees or mark-ups.

Choose Trends Wisely

Not all home-building trends stick. Expensive features like giant kitchen islands, cathedral ceilings, and open floor plans are no longer on the leading edge of home design.

Go with a timeless home design that lasts over the long term rather than elements and styles that quickly age out.

Buy Less Expensive Appliances

Buyers of new homes spend about $4,255 on appliances. But that's just the average. Refrigerators can cost from $3,000 to $4,000 and upwards. High-end dishwashers can cost $2,000 or more.

Investigate appliance reviews for less expensive products that deliver the features you want for less money.

Avoid Changes If Possible

Change orders usually, but not always, drive up the cost of building the home. Change orders are agreements that the builder and homeowner both sign to change the original contract.

Changes might involve more expensive work (such as increasing the size of the kitchen or bathroom). Change orders can address less substantial work, like changing the completion date or indicating that the home buyer will be supplying certain materials (rather than builder-supplied).

Reduce Builder Sales Costs

On average per house, home builders charge $92,720 for sales commissions, marketing, and profit. That's between 14- to 15-percent of the entire cost of building the home.

While these are non-negotiable costs, it's worth shopping around for home builders to find one that charges less for these costs.

Professional vs. DIY Work

Depending on one's inclination and ability, a homeowner can step in during lulls in construction or post-construction and do some of the work. This saves on the cost of contractor-driven work, with its attendant mark-up fees.

Save on the Cost of Interior Finishes

The vast category of interior finishes, about 24-percent or $94,300 of the cost of building a house, lends itself well to DIY work.

A homeowner can install floor coverings like luxury vinyl or laminate or install window treatments. Experienced DIYers can paint the interior or finish the basement.

Potential Savings

• Drywall: $13,184

• Interior trim: $12,727

• Painting: $8,793

• Cabinets and counters: $17,775

• Flooring: $13,000

• Plumbing fixtures: $5,166

Save on the Cost of Final Steps

The cost category of exterior final steps is another area where homeowners can pitch in and do it themselves. Another option is to postpone less-than-critical exterior projects until they're more affordable.

Removing this category from the total house-building cost saves six-percent or $23,650 of the total cost.

Homeowners can take on outdoor work by building patios and walkways or planting trees, shrubs, and grass. More ambitious exterior work includes painting the house exterior.

Potential Savings

• Landscaping: $9,123

• Outdoor structures: $2,178

• Driveway: $8,775

• Cleaning up: $2,280

Frequently Asked Questions

Is it cheaper to buy or build a house?

It is cheaper to buy a house than to build a house. The median price for an existing house is $324,970. The average cost of building a house is $520,500. That's a difference of $195,530. When a full-service builder is involved, builder's sales fees bring the price to $644,750—around twice the cost of buying a house.

How can I save the most money when building a house?

You can save the most money when building a house by reducing its size. For every 100 square feet you reduce the size of the house, the cost of the home goes down by $20,300.

What is the most expensive part of building a house?

The most expensive part of building a house is the cost of the land. The property costs $114,620, on average. The wide category of interior finishes comprises close to a quarter of the cost of house construction. The interior finishes category includes projects like trim, flooring, interior painting, doors, and cabinets.

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Read the original article on The Spruce.