cost of building a house in the United states

Lets talk about the cost of building a house in the United States. There are many good reasons to build your own home. Maybe you already have a nice floor. Maybe there aren’t many affordable, high-quality homes in your area. Maybe you want to build an investment property to rent out or resell for a profit. So, how much does it cost to build a house from scratch? That’s the million dollar question (in some real estate markets it’s the million dollar question).

The truth is that the cost of building a house in the United states will vary depending on three factors:

The size of the house. A 5,000 square meter (464 square meter) house will cost more than a 2,000 square meter (186 square meter) house.

Quality of finish and equipment. Do you want expensive marble countertops in the kitchen and bathroom or can you live with cheap laminate? Luxury upgrades add up quickly.
Ground conditions. Like home prices, construction costs vary by region. Expect to pay more in the northeast and west than in the south.

Cost Comparison: Build or Buy

Is it cheaper to build your own house than to buy a new house on the market?

According to 2021 data from the US Census Bureau, the average price of a new family home is $464,200 (median sales price is $397,100) and the average cost to build a home is $343,600.

At first glance, that’s a price difference of over $100,000.

But it’s important to note that these numbers are not an apples-to-apples comparison.

The sale price of $464,200 is what the buyer paid for the house and the land it sits on.

The construction cost of $343,600 is only the “contract price” charged by the contractor to build the building. The price, if required, is different.

What does it mean? This means that if you already own land, it will be cheaper than building your own house. But if you don’t own land, you may not save much, if any, compared to buying a newly constructed home.

When the National Association of Home Builders (NAHB) surveyed its members in 2019, it found that the average lot costs almost $90,000 (for an average size of 22,000 square feet or 2,045 square meters).

Keep in mind that the costs listed in this article are for homes built by contractors. In other words, we assume that you hire a general contractor to do the building.

General contractors add 20-30% to the total cost of building a home, because this is how they are paid for hiring and managing all the contractors.

Twenty to 30% is a great deal! You may be tempted to act as your own general contractor and may save tens of thousands of dollars, but it may not be worth it.

First, working as a contractor takes time, and if you’re new to building, you can make big, expensive mistakes.

Not to mention that some contractors will charge you more than they would a professional contractor, so that 20-30% of the money can be eaten up by higher costs.

Big picture price breakdown

According to the latest NAHB survey in 2019, the total cost to build a 2,594 square meter (240 square meter) home is $296,652. That’s about the total “contract price” calculated by the Census Bureau in 2020 for a 2,333-square-foot (216-square-meter) house.

Again, it should be noted that these costs do not include the purchase of land or lots, and the figures below are averages that vary widely from region to region.

That said, here’s how NAHB breaks down the cost to build a 2,594 square foot home at each stage of the construction process. (This square footage is the average size of a family in the United States, according to NAHB):

Depreciation of construction funds

A rough breakdown of the average cost to build a house.

These vary, however, in each house. As you can see above, the most expensive type when building a house is “interior finishing,” which includes every door, light fixture, toilet, countertop, and sink in the house.

This group is expensive because it includes many different things, each of which can cost a lot of money, said Paul Emrath, vice president of housing research and analysis for NAHB.

Emrath said: “There are ways to save and spend less than the builders. Choose a cheaper countertop, spend less on the interior, or maybe leave out the fireplace.”

Ultimately, it depends on personal preference and budget. You can easily spend more or less than the national average in the end, but beware of “upgrade creep”.

Every time you say yes to a contractor’s suggestion for a cheaper appliance or water heater, it can affect the quality of your house

Do construction costs change from year to year?

That’s a good question and the unhelpful answer is: sometimes. It is difficult even for experts to predict what a house or house will increase in price in the near future. For example, no one saw the coming of the COVID-19 pandemic or the scarcity (and rising prices) of staples like wood. Although global epidemics are rare, the cost is constant, Emrath said. “Some things are shipped overseas, like concrete,” he says.

“A few years ago, we saw shortages when China’s economy was booming and they were consuming a lot of international shipping capacity.”

The figures we mentioned above give an overview of the cost of construction in 2019, before the pandemic.

Economists are certainly hopeful, but cannot guarantee that prices will return to those levels once the post-pandemic economy returns to normal.

This is another important consideration when deciding whether to build or buy an existing home.

Do you want it right away? A custom home built by a contractor takes an average of 9.7 months from start to finish, according to the Census Bureau. Think of it like welcoming a new baby. A baby that costs $300,000.