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Building A House: A Breakdown Of How Much It Costs

Miranda Crace8-minute read

August 15, 2022

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If you’ve spent hours browsing homes online and in-person only to find dealbreakers with every single one, you may have considered giving up on buying a house altogether and opting instead to build your own place from the bottom up.

Building your own house can come with a lot of benefits, the main one being that you have the opportunity to get exactly what you want and create a dream home that checks off every item on your “want and need” list – provided you can afford it.

So, can you afford it?

Get approved to see what you can afford.

Rocket Mortgage® lets you do it all online.

How Much Does It Cost To Build A House?

According to HomeAdvisor, the average cost to build a house in 2022 is $282,299 as of February. That may sound like a lot, but it’s actually less than the median home sales price, which was $400,600 in that same month, according to the U.S Census Bureau and the U.S. Department of Housing and Urban Development’s data.

So, is it cheaper to build a house rather than buy one? Not necessarily. The total cost of building a custom home can also vary quite a bit depending on the choices you make, the building materials you use, labor costs and even what region of the country you’re in. Though $282,299 is the average, most homeowners spend $114,209 – $450,824 to build their homes. Keep in mind, you also need to buy and prep the land the home is on.

Average Cost To Build

National Average

$282,299

Minimum (800 square feet)

$80,000

Maximum (5,000 square feet)

$1,000,000

Average Range

$114,209 – $450,824

Source: HomeAdvisor

Average Cost To Build Per Number Of Bedrooms

Bedroom Count

Average Cost

1

$80,000 – $400,000

2

$100,000 – $480,000

3

$150,000 – $800,000

4

$200,000 – $1,000,000

Source: Fixr

A Breakdown Of The Average Cost To Build A Home

Let’s take a look at the different steps that make up the home building process and break down how much each step typically costs. Keep in mind these costs can fluctuate with demand for land, materials and labor. For example, costs for building materials have spiked during the COVID-19 pandemic due to high demand, with prices increasing 5% – 10% in 2021 alone.

Buying And Prepping Land ($80,000)

Before you can build a house, you need land to build it on. Not only will you have to purchase a plot of land, but you’ll have to have it cleared. This can include tree removal and having the land leveled.

The cost of purchasing an empty lot will vary depending on a variety of different factors, including the size of the lot and its location. Based on HomeAdvisor’s data, the average cost of purchasing land is $76,500, with undeveloped lots in rural areas available for as little as $3,000. You can also expect to spend between $1,500 – $3,000 on land preparation before breaking ground on construction.

Drawing Up Plans And Getting Permits ($7,200)

Once you’ve got your land, your general contractor and subcontractors will start preparing to build the house. This stage includes having an architect draw up floor plans for the home and purchasing all the necessary permits.

On average, house plans cost around $5,000 but the exact cost will vary depending on how simple or complex your house is going to be and what types of building permits and preliminary inspections you may need. Building permit requirements will differ between locations, but on average cost around $2,200.

Prepping And Building The Foundation ($14,500)

After all the prep work is taken care of, it’s finally time to break ground. A crew will come and begin digging out a space for your home’s foundation.

Then, they’ll pour the concrete according to which type of foundation you’ll have: slab, crawl space or basement. Typically, a concrete slab foundation is the cheapest, followed by the slightly more expensive crawl space and the most expensive basement foundation.

Which foundation you choose will depend on your budget and preferences. Each type has its pros and cons, so be sure to do your research. Most people won't be interested in buying a house with foundation issues.

Prepping and building your foundation will, on average, cost $14,500.

Framing The Home ($35,000)

Next up is framing. Think of this step as building the skeleton of your home. Floors will be framed and then covered with plywood. Walls will be framed, raised and then sheathed with plywood or oriented strand board. Then, the trusses that will frame the roof are built and placed on top of the wall frames.

All in all, this process will cost between $20,000 – $50,000, depending on size and floor plan, averaging around $35,000.

Installing External Elements ($50,000)

Once the skeleton is built, all the necessary external elements of the walls, roofs and openings will be installed. This means exterior finishes like the siding will be put up on the walls, then windows and doors will be put in, after which the roof will be sheathed – covered in roofing felt and nailed-on shingles. In total, this costs around $50,000.

Installing Plumbing And Electrical ($52,500)

Now it’s time to install all the major systems that make your home hum with water, air and electricity. At this stage, plumbing and HVAC systems will be installed, and an electrician will wire your home and get you connected to the power grid.

No fixtures will be added at this time; this step is about getting all the behind-the-scenes stuff like pipes and ducts set up. Major system installation costs average around $52,500.

Adding Interior Finishes ($112,500)

Next are the interior finishes. This includes adding insulation, drywall, flooring, interior doors and all the basic components that will turn the newly constructed structure into a livable home. Cabinets and countertops will be installed, walls will be painted and appliances will be hooked up.

This can easily be one of the most expensive parts of the home building process, and the exact cost will depend on your personal preferences. On average, interior finishes will cost around $112,500, though they may cost much more if you have expensive taste. Once this step is finished, your home’s construction will be all but complete.

Finalizing Additions ($20,000)

The final step includes any other additions you want made to your property, including any outdoor structures like a deck or patio, a driveway or any landscaping. These projects may be completed in the middle of the home building process, in conjunction with some of the steps listed above. Of course, any additions onto your house will also add to the total cost of the project. For example, adding fencing around your yard will cost between $2,000 – $5,000, and driveway paving averages around $6,600.

Once everything is finished, work areas will be cleaned up and all the necessary inspections completed. This can cost around $20,000.

Other Considerations For Building A House

Keep in mind that all these construction costs are averages, so when you’re coming up with your building budget, you should take care to do your research and get estimates for all the jobs that will need to be done to get your house built.

Construction costs can fluctuate greatly depending on the availability of materials, too. With more accurate quotes, you can figure out how much house you can afford and what the final square footage could reasonably be.

Additionally, once you have your total budget, it’s generally a good idea to give yourself some wiggle room with a bit of extra money in case things end up costing more than you originally anticipated.

Cost By Size

One of the biggest factors determining how much a home will cost is its size, specifically calculating the price per square foot. Here’s a breakdown of what you can expect to pay for a newly constructed home by popular house sizes. For reference, the median size of a new, single-family home in 2021 was between 2,000 – 3,000 square feet.

Size

Average Cost Range

800 sq. ft.

$80,000 – $160,000

1,000 sq. ft.

$100,000 – $200,000

1,200 sq. ft.

$120,000 – $240,000

1,500 sq. ft.

$150,000 – $300,000

2,000 sq. ft.

$200,000 – $400,000

2,500 sq. ft.

$250,000 – $500,000

3,000 sq. ft.

$300,000 – $600,000

Source: HomeAdvisor

Factors Affecting The Cost Of Building A House

While we’ve done our best to give you the most recent data on how much building a home costs on average, the fact is it’s difficult to say with any certainty how much your new house construction project will cost. You’ll need to do some research into the average prices in your area and get estimates from potential contractors for the most accurate construction costs.

Your overall cost can be affected by all sorts of factors, including current real estate trends, the availability of materials and labor in your area and the types and qualities of the materials you choose.

The total price you pay will also be determined by the type of home you’re building. A very simple, small home can be relatively affordable to build. A more high-end, luxury home with multiple stories and architectural flourishes will, naturally, be much more expensive.

When To Consider Building A House

Weighing whether you should buy an existing home or take the plunge and build your own? There are many important factors to consider.

Compared to building a house, buying an existing one off the market is typically a much simpler and faster process. New homes can take months to build, while the home buying process can be completed in as little as 1 – 2 months. Additionally, building a home usually comes with plenty of stress and lots of decision-making. If you’re looking to spare yourself months of headaches, buying a home might be the easier option. It can also be easier to get a mortgage because you don’t have to deal with finding a construction loan.

On the other hand, building your own home gives you the opportunity to get everything you want, while the home buying process requires you to make a lot of compromises. Plus, as long as your home is well-built, you won’t have to worry about dealing with costly repairs right away, as you might with an older house needing a roof replacement or a new HVAC system.

A newly built home means you have all-new components, which are more likely to last for years to come than an existing home’s older components.

How To Afford Building Your Own Home

As you’ve now seen, none of this will come cheap. While hopeful home buyers can apply for a mortgage loan to finance the purchase of an existing home, hopeful home builders don’t have that same option, as you typically can’t use a traditional mortgage to fund the building of a home.

If you don’t have the cash to fund this project, what you’ll need is a home construction loan. These are short-term loans that are used to fund the building of a new home. You can get a home construction loan that converts to a traditional mortgage loan once the construction has been completed.

You can also get a construction-only loan that covers the costs of construction and then, once the project is completed, apply for a traditional mortgage to pay off the construction loan.

While Rocket Mortgage® doesn’t offer construction loans, you can use our services to get a loan for a newly built house.

The Bottom Line: Calculate The Cost Of Building A House

While the average cost to build a house is $282,299 as of February, most homeowners spend $114,209 – $450,824 to build their homes. Even though you can get a general idea of what you may pay, it’s important to keep in mind that there are numerous factors that will impact the cost to build.

There’s also a lot more to consider than cost. For instance, you’ll want to weigh the customization that comes with building a new home against the convenience of buying something preexisting. Although the process of securing financing for a preexisting home might feel intimidating at first, it’s much simpler than if you’re building a house from the foundation up. Why not learn about mortgage preapproval to get a clearer view of the path you’d find ahead of you with a conventional mortgage? You can apply online or give us a call at (833) 326-6018.

Take the first step toward buying a house.

Get approved to see what you qualify for.

Miranda Crace

The Rocket Mortgage Learning Center is dedicated to bringing you articles on home buying, loan types, mortgage basics and refinancing. We also offer calculators to determine home affordability, home equity, monthly mortgage payments and the benefit of refinancing. No matter where you are in the home buying and financing process, Rocket Mortgage has the articles and resources you can rely on.