How Much Does It Cost To Build A House In 2023?

Building a house is an exciting and significant milestone in life. It’s an opportunity to create a home that reflects your style and meets your needs. However, cost is one of the most important considerations when starting a new home construction project. Understanding the factors contributing to the cost of building a house can help you plan your budget effectively. This comprehensive guide will explore the average cost of building a house in 2023, factors that influence the cost, and tips for financing your dream home. Now, let’s dive into the details and discuss the cost of building a house in 2023.

Can You Build Your Own House?

Absolutely! You can construct your dream home with the perfect piece of land in your preferred location. However, planning for both the time and expenses involved in building a house is crucial. Also, remember that you’ll need the necessary permits to proceed with construction. The cost of these permits typically depends on factors like the value of your future home or the size of the construction area. Permit fees aren’t usually a fixed amount and can vary from one county to another. To learn more about your area’s specific permit requirements and costs, check your local county’s website or contact their office for detailed information.

Is it Cheaper to Build or Buy a House?

Purchasing an existing home tends to be more budget-friendly than constructing a new one. However, building your home offers the advantage of a brand-new, tailor-made dwelling that suits your needs.

The cost of building a house in the United States varies, typically between $110,000 to $480,000, with the national average around $295,881. It’s important to note that this cost estimate excludes expenses such as land acquisition, excavation, permits, and other associated costs. Home construction expenses can even extend into the millions for customized or elaborate builds.

If you are considering buying a pre-built home, the median sale price as of May 2023 is approximately $418,083. Building a home, especially if you take on the role of an owner-builder, can be a time-intensive process. It may take up to 12 months to complete the construction independently. Even with the assistance of a contractor, the process can still require around nine months. Thus, new home construction demands a significant financial investment and considerable time and effort.

Factors Affecting the Cost of Building a House

Several factors can influence the price of building a house. It’s important to consider these factors when planning your budget. These are the key factors that can influence the cost of constructing a house:

Location Matters

The geographical location of your construction site plays a significant role in showing the cost of building a house. Urban areas often come with higher land prices and building permits, while rural areas may offer more affordable options. Additionally, regional variations in labor and material costs can impact your budget.

Size and Style of Your Home

Your budget will be directly affected by the size and architectural style of your house. Larger homes with intricate designs will naturally cost more to build than smaller, simpler structures. Consider your family’s needs and preferences when determining the size and style of your new home.

Material Selection

Choosing the right materials for your house is crucial. The quality and type of materials you opt for can significantly affect the overall cost. Premium materials like hardwood flooring and granite countertops will increase expenses, whereas more budget-friendly options can help you stay within your budget.

Labor Costs

Labor costs are a substantial portion of your construction budget. Skilled labor, such as carpenters and electricians, demands higher wages. The availability of skilled labor in your area can also impact costs. Seasonal fluctuations may affect labor prices, so plan your construction timeline accordingly.

Permits and Regulations

Every region has specific building codes and regulations that must be adhered to. Acquiring the necessary permits and meeting these standards can add to your expenses. Be sure to account for permit fees and any required inspections in your budget.

Design and Architectural Fees

If you’re working with an architect to design your dream home, their fees will be additional. Architectural services are essential for creating a functional and aesthetically pleasing house.

Land Preparation and Utilities

Preparing the building site, including excavation and foundation work, is a significant cost. Additionally, connecting utilities like water, electricity, and sewage to your property can be expensive, depending on your location.

Interior and Exterior Finishes

The finishing touches, like flooring, paint, and fixtures, are important for your home’s overall look and feel. These details can vary widely in cost based on your preferences.

Related: How Much Does it Cost to Build a Self Storage Facility?

Average New House Cost Per Square Foot

The average cost to build a house is approximately $300,000, excluding the cost of land. The cost of building a new house can vary a lot based on factors like where you’re building, how big the house is, how it’s designed, and the materials used. On average, a basic new house can cost around $150 for each square foot. But if you want a really fancy or custom-made home, it can cost as much as you’re willing to spend, ranging from $30,000 to several million dollars.

Price to Build a House by State

The cost of building a house primarily depends on its location, which impacts expenses like labor, materials, delivery, and land prices. In certain states, a $250,000 budget can secure a spacious house with multiple bedrooms, bathrooms, and even acres of land. Conversely, a $500,000 budget in other regions might only afford you a four- or five-bedroom home. It’s crucial to compare quotes from local builders to find the best price and quality for your project.

Here are the average costs for constructing a 2,000-square-foot house in each state. Keep in mind that urban and rural areas have distinct cost variations. These estimates do not include land and site development costs or additional features like garages, decks, or basements.

State	Amount	State	Amount
Illinois	$265,440	Pennsylvania	$302,200
Missouri	$226,760	Wyoming	$290,420
Mississippi	$255,320	Wisconsin	$239,140
Minnesota	$236,980	West Virginia	$301,120
Michigan	$216,780	Washington	$343,100
Massachusetts	$350,820	Virginia	$310,100
Maryland	$294,160	Vermont	$307,840
Maine	$282,140	Utah	$288,560
Louisiana	$269,920	Texas	$264,100
Kentucky	$280,580	Tennessee	$261,940
Kansas	$207,120	South Dakota	$204,420
Iowa	$214,040	South Carolina	$301,840
Indiana	$219,300	Rhode Island	$338,180
Alabama	$267,620	Montana	$298,960
Idaho	$315,520	Oregon	$340,580
Hawaii	$412,840	Oklahoma	$260,500
Georgia	$273,860	Ohio	$222,480
Florida	$263,640	North Dakota	$212,500
Delaware	$327,060	North Carolina	$301,500
Connecticut	$345,440	New York	$360,180
Colorado	$299,300	New Mexico	$290,940
California	$405,440	New Jersey	$376,900
Arkansas	$251,800	New Hampshire	$299,900
Arizona	$295,580	Nevada	$334,140
Alaska	$421,080	Nebraska	$210,900

Remember that these are just average prices, and the actual costs can differ depending on where you’re building within each state. Additionally, prices can differ significantly between urban and rural areas.

Building Cost Estimator

Understanding the breakdown of costs in building a house is crucial for effective budgeting. Here is a comprehensive list of the various expenses you can expect throughout the construction process:

Pre-Construction Costs

Before construction can begin, there are several pre-construction costs to consider:

Off-Site Living Expenses

When you’re eagerly envisioning your new home, it’s crucial to factor in off-site living expenses as part of your budget planning. Financing your new construction project means securing affordable accommodation while your dream home is being built.

A new home construction project’s duration can vary, typically seven to 24 months. The exact timeline hinges on factors like the availability of construction materials, local builders, and site accessibility.

Land Purchase Costs

Your first financial outlay in this endeavor will be acquiring the plot of land where your future home will stand. It’s important to note that the cost of land isn’t included in our average estimate of $300,000, as land prices can fluctuate significantly based on many factors, including soil quality and the scenic views from your prospective front porch. It’s advisable to research plot prices in your desired location.

Water and Sewage System Assessment

Once you’ve secured your plot of land, the next step is to conduct an inspection to assess the water and sewage systems on the property. This inspection is crucial to ensure that your future home will have a reliable water supply and effective waste drainage.

This assessment is particularly critical for new construction projects and properties located near bodies of water. Typically, this inspection costs around $4,500, although the expense may be lower if pre-existing utility lines are in place.

Demolition and Deconstruction Costs

Suppose you’ve acquired a property with a house that’s beyond repair or doesn’t align with your preferences. In that case, including the expenses for demolishing the existing structure in your budget is important. The cost of demolition can vary, typically ranging from $6,000 to $20,000.

However, if you wish to salvage and resell certain elements of the old building, you might consider deconstruction, which can be more expensive, starting at $24,000 or more.

House Plans or Architectural Design Fees

Next, you’ll need to acquire house plans that suit your vision for the new home. You have a couple of options here. You can opt for pre-designed blueprints available online, which are often reasonably priced.

Alternatively, if you desire a completely customized home, you should budget for hiring an architect or draftsperson to create a tailored floor plan. Architectural fees for residential projects typically fall within 8 to 12% of the overall construction cost.

Construction Management Expenses

Your architect may suggest engaging a construction management firm to oversee the project. Hiring an experienced project manager can be a wise decision, as they play a crucial role in:

Coordinating laborers
Managing the delivery of materials
Ensuring high-quality workmanship
Handling necessary paperwork

The fees for construction management services can vary from 5% to 15% of the total construction cost. Collaborating with a trusted and experienced manager can save both time and alleviate potential complications for all parties involved in the project.

Building Permits and Local Fees

Before construction can commence, you must obtain building permits and pay various local fees. Building permits ensure that your construction plans meet local building codes and regulations. The cost of building permits and local fees can vary depending on your location.

Considering these pre-construction costs, you can better plan your budget and ensure a smooth construction process.

House Exterior Material Costs

The materials used for the exterior of your house play a significant role in its overall cost. Here are the key cost considerations for the house’s exterior:

Excavation

Excavation is the first step in the construction process. It involves preparing the site for construction by removing soil and leveling the ground. Excavation costs can range from $1,400 to $3,200, depending on the complexity and size of the site.

Foundation

The foundation is the base of your house, providing stability and support. The cost of the foundation depends on the type you choose. A typical slab foundation can cost between $4,500 and $13,500, while a foundation with a basement can range from $18,000 to $80,000. The cost varies based on size, design, and location.

Framing

Framing is the process of constructing the structural framework of your house. It includes floors, walls, and roof trusses. Framing costs can depend on the size and complexity of the house. High-quantity lumber framing costs around $33,000, while metal stud framing systems start at about $20,000.

Roofing

Roofing is a crucial component of your house, protecting it from the elements. The roofing cost depends on the materials you choose and the size and complexity of your roof. Asphalt shingles are the common and cost-effective option, ranging from $5,500 to $11,500. Other roofing materials, like metal, tile, or slate, can be more expensive.

Siding

Siding not only enhances the appearance of your house but also protects it from the elements. The cost of siding depends on the material you choose. Vinyl siding is a common and budget-friendly choice, typically costing around $12 for each square foot. Materials such as fiber cement, wood, or brick can cost more.

Driveway

The driveway is essential to your house’s exterior, providing access and parking space. The cost of a driveway depends on the material you choose. A paved driveway can cost around $4,500, while a gravel driveway is more affordable at approximately $1,500.

Landscaping

Landscaping adds the finishing touches to your house and enhances its curb appeal. The landscaping cost can depend on the size and complexity of the project. Budgeting around $2,000 for basic landscaping, including sod, grass, and plants, is a good starting point.

Considering these exterior material costs, you can ensure your house is structurally sound, visually appealing, and protected from the elements.

Home Interior Material Costs

The interior materials used in your house contribute to its overall quality and comfort. Here are the key cost considerations for the home’s interior:

Material Cost to Build a House: $125,000

The cost of constructing a house is a significant financial consideration, with building materials constituting roughly half of the total expenses. Typically, you can anticipate spending around $50 per square foot on the materials needed to construct your home.

However, it’s worth noting that the cost of building materials experienced an increase of 5% to 10% in 2022 when compared to the prices in 2021. This uptick was primarily driven by heightened demand for various materials, such as siding, and extended delivery times.

As we move into 2023, the outlook for home building prices remains uncertain. Ken Simonson, who holds the position of Chief Economist at the Associated General Contractors of America, has foreseen price changes. Some products may see price hikes ease, while others may continue to face volatility. It’s a situation that will require careful monitoring for anyone planning to build a home this year.

When budgeting for your home construction project, you’ll need to account for specific material costs, and here’s a breakdown of some of those expenses:

Flooring Cost: Flooring materials can vary significantly, ranging from $2 to $20 per square foot.
Drywall Cost: When it comes to drywall, you can expect to spend between $12 to $20 per panel.
Lumber Cost: Lumber, a fundamental building material, typically costs $10 to $12 per square foot.
Siding Cost: Siding materials vary in price, ranging from $1 to $14 per square foot.

Contractor(s) Charges: 10% – 20%

When it comes to electrical expenses for new construction, the typical cost per square foot varies between $3 and $5. This total covers both the initial wiring and the finishing touches.

Your specific electrical expenses can vary based on factors like the size of your property, the type of wiring used, and the materials for the wires. If you’re looking to save money, consider tackling some of the electrical work yourself, but it’s essential to have a professional electrician verify the connections. Remember that electricians may charge hourly rates, which can go as high as $120.

Here are the average hourly rates for home building professionals in the United States:

Flooring Installers: $20.61 per hour
Roofers: $22.42 per hour
Painters: $19.71 per hour
Brick Masons: $24.94 per hour
Landscapers: $17.93 per hour
General Contractors: $24.61 per hour
Plumbers: $27.33 per hour
Carpenters: $23.41 per hour
HVAC Technicians: $26.76 per hour
Structural Engineers: $39.69 per hour
Electricians: $27.48 per hour

The hourly rates can change based on where you are and the particular skills needed for your project.

Electrical Expenses: $7,500 – $12,500

Typically, the average cost for electrical work in new construction is around $3 to $5 per square foot. This cost includes both the initial installation and the final touches.

The total amount you’ll spend on electrical work can be based on factors such as the size of your property, the type of wiring needed, and the materials used for wiring. To save some money, you can attempt to do the electrical work yourself, but it’s essential to have a qualified electrician inspect the connections. Keep in mind that electricians might charge up to $120 per hour for their services.

Roofing Installation Expenses: $5,500 – $33,000

The roofing installation cost depends on several factors, including your choice of roofing material, the slope of your roof, and the overall size of your house. Here’s a breakdown of roofing costs per 100 square feet for different materials:

Asphalt Shingle Roof: Approximately $219.55
Tile Roof: Around $1,019.34
Wood Shake Roof: Approximately $635.13
Slate Roof: Roughly $1,319.92

These figures give you an idea of what to expect when budgeting for your roofing project.

Plumbing Expenses: $12,000

Plumbing expenses cover the installation of essential fixtures like toilets, faucets, sinks, bathtubs, and more. Typically, homeowners allocate about $4.50 per square foot for plumbing fixture installation in new construction projects.

In addition to fixing pipes and setting up sewage lines, you’ll also need to introduce new appliances such as dryers, washing machines, and water heaters when designing a custom-built home.

HVAC Setup Costs: $15,000

The cost of installing a new Heating, Ventilation, and Air Conditioning (HVAC) system for your home can range from $1,500 to $12,500. This cost hinges on various factors, including the cooling area’s size, the system type, the chosen brand, and the incorporation of additional zones. These extra considerations can raise the installation cost by $2,000 or more.

Soft Costs to Build a House

Soft costs in home construction refer to expenses not directly involved in the construction process. These expenses include permit fees, design fees, and similar expenditures.

Acquiring and Preparing land: $20,000 per Acre

Before embarking on your home construction journey, finding the perfect plot of land is crucial. This step involves two primary expenses:

Land Purchase Cost: The price of land varies depending on factors such as location and the size of the house you intend to build. In the United States, an acre of land costs around $17,665.
Preparation Cost: To prepare the land for construction, you’ll need to clear it and ensure it’s level. Land preparation costs typically range from $1,500 to $3,000.

The cost of land can vary greatly from one state to another. Here are the top five states with the highest land prices:

New Jersey: With an average cost of $196,410 per acre.
Rhode Island: Averaging $133,730 per acre.
Connecticut: Where land costs around $128,824 per acre.
Massachusetts: With an average price of $102,214 per acre.
Maryland: Land in Maryland typically costs about $75,429 per acre.

If you want to save on land expenses, consider purchasing undeveloped land. However, remember that you might incur additional costs for activities such as leveling and filling to make the land suitable for construction.

On the flip side, here are the five states where you can find land at a more affordable price:

Wyoming: With an average cost of just $1,558 per acre.
New Mexico: Averaging $1,931 per acre.
Nevada: Where land costs around $2,116 per acre.
South Dakota: With an average price of $2,135 per acre.
Montana: Land in Montana typically costs about $2,283 per acre.

Permit Costs: $3,000

In the United States, contractors are required to obtain building permits when constructing new houses. These permits serve as official authorization for the construction process and are subject to state laws that often distinguish between commercial and residential projects.

The price of these permits can significantly depend on factors such as the type of construction, the intended occupancy, the home’s size, and the project’s scope. Here is a breakdown of some common permits you may need, along with their average costs:

Building Permit: Typically ranges from $1,000 to $2,000.
HVAC Permit (Heating, Ventilation, and Air Conditioning): Usually costs $250 to $400.
Plumbing Permit: Costs can vary widely, ranging from $50 to $500.
Electrical Permit: The cost can range from $10 to $500.

Notably, these permit costs are not fixed and can vary from county to county. Builders and contractors must check with local authorities to determine the specific permit requirements and associated project fees. These permits ensure that construction adheres to safety standards and regulations.

Furnishing Your New Home: $20,000

When preparing to move into your new home, you’ll need to budget for essential items like furniture, electronics, kitchenware, and bathroom necessities. While these items may seem reasonably priced individually, their costs can quickly add up.

The final price tag for these furnishings will vary based on your personal style preferences, the quality of materials you choose, your location, and where you shop. For a 2,500-square-foot home, setting aside a budget of at least $20,000 for interior furnishings is a wise choice.

Hiring an Interior Designer: $5,400

If you don’t feel sure about your interior design abilities, you have the option to employ a professional interior designer. A skilled interior designer can provide you with 3D visualizations and mock-ups of your home’s appearance and function, allowing you to make informed decisions about finishes and decor.

Interior designers take care of sourcing the right furniture, wall art, rugs, carpets, and decorative items that align with your preferences and functional needs. They can also help you make the most of your available space.

However, it’s important to note that the services of an interior designer come at a cost. Typically, you should plan to allocate approximately $5,400 for their services, but the actual cost might differ depending on your project’s specific needs.

House Building Financing Options

If you don’t have enough funds to finance your dream house, there are several options to consider for getting the necessary financial support. Here are some ways to help you build your dream home:

Home Construction Loans

Home construction loans are tailor-made for building your dream house. There are two main types:

Construction-to-Permanent Loan: This loan covers both the cost of buying the land and the expenses of building the house. Once your construction is finished, this loan smoothly transitions into a conventional mortgage, typically lasting 15 to 30 years.
Construction-only Loan: This option is solely for financing the home construction itself and doesn’t include land purchase. After your home is completed, you’ll need to repay the entire loan amount. You can either use cash or take out a mortgage to cover this amount.

Personal Loan

A personal loan can be helpful if you need extra funding for specific aspects of your home construction. For instance, if you forgot to budget for landscaping, a personal loan can provide the funds you need to complete that part of the project.

Home Equity Loan

If you already own a property, a home equity loan can be a valuable resource to finance your new home’s construction. The amount you can borrow depends on the equity you have in your existing home. You can use this loan to cover the entire construction cost or a portion of it.

Don’t worry if you’re short on funds; these financing options can help you turn your dream home into a reality.

When to Consider Building a House

Deciding whether to build a house or buy an existing one is a personal choice that depends on various factors. Here are some situations where building a house might be the right choice:

Customization: If you have specific design preferences and want a home tailored to your needs, building a house allows for greater customization.
Location: If you have a specific location in mind and limited housing options are available, building a house can be a viable solution.
Long-term Investment: Building a house allows you to have a brand-new home that can potentially be appreciated over time.
Energy Efficiency: Building a house allows you to incorporate energy-efficient features and technologies, which can lead to long-term savings on utility bills.
Unique Requirements: If you have specific accessibility or functionality requirements, building a house allows you to design a home that meets those needs.

However, building a house is not without its challenges. It requires careful planning, coordination, and management. It’s important to assess your financial situation, timeline, and personal preferences before deciding.

How to Finance Building Your House

Financing the construction of your own house requires careful consideration and planning. Here are some options to consider:

Construction Loans

A construction loan is a temporary loan created specifically to fund the building of a new home. With a construction loan, you can borrow funds to cover the costs of construction materials, labor, and related expenses.

Traditional Mortgages

If you already own the land on which you plan to build your house, you can secure a traditional mortgage that covers both the land and construction costs. This type of mortgage is called a construction-to-permanent loan. It combines the land purchase and construction financing into a single loan.

Home Equity Loans

If you already own a property, you might use its value to help pay for building your new home. You can do this by getting a home equity loan or line of credit, which lets you borrow money based on how much your existing property is worth. However, it’s important to carefully consider the risks and implications of using your existing property as collateral.

Savings and Personal Funds

Using your savings or personal funds to finance the construction of your house is another option. This can provide more flexibility and control over the financing process. However, it’s important to ensure that you have enough savings to cover construction costs and any unexpected expenses that may arise.

Before you choose how to finance your project, it’s important to talk to a financial advisor or mortgage lender. They can help you in understanding the specific rules and conditions for each financing choice. They can provide guidance based on your financial situation and help you determine the best financing strategy for your needs.

Budgeting Tips

Budgeting for building a house is a crucial step in the construction process. To keep your project financially on course, take these budgeting suggestions into account:

Plan Ahead: Careful planning is the cornerstone of a cost-effective construction project. Create a detailed budget, accounting for all potential expenses.
Get Multiple Quotes: Don’t settle for the first contractor you find. Obtain quotes from multiple sources to ensure you’re getting a competitive price.
Choose Energy-Efficient Options: Investing in energy-efficient appliances and materials can lead to long-term savings on utility bills, making it a wise choice for budget-conscious homeowners.
DIY vs. Hiring Professionals: Evaluate which tasks you can do yourself and which require professional assistance. DIY can save money if you have the skills, but some jobs are best left to experts.
Regular Inspections: Conduct regular inspections to catch any issues early. Addressing problems can prevent costly repairs down the line.
Be Realistic: While everyone wants their dream home, setting realistic expectations within your budget is essential. Be prepared to make compromises to stay on track financially.

Frequently Asked Questions (FAQs)

Is it cheaper to buy a house or build one?

The cost of buying or building a house depends on various factors such as location, market conditions, and individual preferences. Sometimes, it can be less expensive to purchase a house that already exists, especially if you discover one that best fits your budget and needs. However, building a house gives you the chance to make it just the way you want and meet your unique requirements.

What are the disadvantages of building a house?

Building a house can be a complex and time-consuming process. It requires careful planning, coordination, and management. Potential disadvantages include higher costs than buying an existing house, delays or unforeseen challenges during construction, and the need for active involvement in the decision-making and construction processes.

What is the cheapest type of house to build?

The cheapest house type depends on various factors such as location, materials, and design. Generally, smaller houses with simpler designs tend to be more affordable. Using cost-effective materials such as prefabricated or modular construction techniques can also help reduce costs.

How long does it take to build a house?

The duration for constructing a house can fluctuate based on elements such as the house’s size and intricacy, the accessibility of labor and materials, and the weather conditions. On average, the construction process can take several months to over a year.

What should you consider when choosing a builder?

When choosing a builder, it’s important to consider their experience, reputation, and track record. Seek builders with a track record of successfully completing projects of excellent quality, meeting deadlines, and staying within budget. It’s also important to review their portfolio and speak with previous clients to understand their workmanship and professionalism.

What additional costs should I budget for when building a house?

In addition to the construction costs, there are various additional costs to consider when building a house. These can include permit fees, architectural and engineering fees, landscaping costs, furniture and appliances, and moving expenses. Budgeting for these additional costs is important to ensure you comprehensively understand the total project cost.

Conclusion

Building a house is an exciting endeavor that requires careful planning, budgeting, and decision-making. Understanding the average cost of building a house in 2023 and the factors influencing the cost is essential for a successful construction project. By considering your home’s size, design, and finishes, you can make a budget that aligns with your financial goals.

Exploring financing options and consulting with professionals will help ensure that you have the necessary resources to turn your dream home into a reality. With the right planning and preparation, you can embark on a construction journey that results in a beautiful and comfortable home tailored to your specific needs and preferences.

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