Cost to Build a House

The cost to build a house is the first thing that comes to mind when we think about our dream home. The cost of building a house varies depending on several factors, including the cost of land, the cost of materials, the cost of labor, and other associated costs.

It isn’t a secret that the COVID-19 pandemic increased considerably the costs. Supply chain delays, rising material prices, and labor shortages are all contributing to the spike in building costs.

Depending on where you live in North America, the cost of building a house can range widely. In general, if you are in the United States you can expect to pay anywhere from $100 to $200 per square foot to build a house. However, if you are in Canada, the cost is usually between $100 and $275 per square foot.

Always keep in mind that you will also need to buy and prepare the land where the house will be built.  This can add from a few thousand dollars to tens of thousands of dollars to the total cost of building your house, depending on the size and location of the land.

That may seem like a lot of money, but it is less than the median home sale price of $400,600 in February 2022, according to the US Census Bureau and the US Department of Housing and Urban Development’s statistics.

Cost to Build a House by Square Footage

Size will be the main factor affecting the overall cost to build a house. Although, in some very desirable areas the land could outweigh the cost of building. As a rule of thumb, the bigger the house you are planning to build, the more materials you will need and hours of labor leading to higher costs.

In the United States, the cost of building a new house is around $150 per square foot, and the average new home size is about 2,200 square feet. The table below shows an estimated price range for building a house based mainly on size.

House Square FootageAverage Cost Range
1,000$100,000 – $200,000
1,200$120,000 – $240,000
1,500$150,000 – $300,000
1,600$160,000 – $320,000
1,800$180,000 – $360,000
2,000$200,000 – $400,000
2,500$250,000 – $500,000
2,700$270,000 – $540,000
3,000$300,000 – $600,000
Data Source: HomeAdvisor

Keep in mind that minor changes such as adding a bathroom or pantry may have a significant impact on your wallet as well as the house footprint. If you want to save some money building a house stay away from a large footprint and consider building up.

Breakdown of the Average Cost of Building a House

Let’s break down the building process piece by piece, from beginning to end. But keep in mind that these expenditures are subject to change based on demand for land, supplies, and labor.

For example, construction material costs have increased dramatically during the COVID-19 epidemic with prices rising around 20%.

1) Land

The cost of land is one of the biggest factors in the cost to build a house. The price of land varies widely depending on size and location. In some desirable areas, the land is the most expensive part of building a house.

It’s important to do your research before you purchase land for your new home. In general, you can expect to pay anywhere from $5,000 to $50,000 per acre.

Keep in mind that if you are buying land in a new development you may be obligated to start construction within a certain time frame which could impact your overall cost.

Buying the land is not the only cost associated with it. If you aren’t buying a lot from a developer, you’ll have to prepare the land. This can include leveling the land, and removing trees and/or old buildings. Before digging into the dirt, you should budget between $1,500 and $3,000 for land preparation.

2) House Plans and Permits

The second step is to draw the floor plans for the home and get permits. The cost of obtaining a building permit varies by location, but it costs around $2,200 on average.

If you are building with a big company they will take care of this part for you and the process will go smoother. They already know very well what permits to get and have connections at the town/city office which speed up the permits considerably.

The architect or a draftsperson will draw your floor plans. The price of drafting house plans is determined by a variety of criteria, such as the size of your project and the type of draft it needs. Blueprint costs range from $1,500 to $5,000. 

3) Foundation

It’s now time to break ground!  The cost of a foundation varies depending on the size and type of foundation you need: slab, crawl space, or basement (from lower price to high).

The average cost of a foundation is between $5,000 and $30,000. The type of foundation you choose will be determined by your budget, personal preferences, and regulations specific to the area where the land is.

Each kind of foundation has advantages and drawbacks, so do your homework before making your decision.

4) Framing

After the foundation is complete, it’s time to start framing the house. This cost includes installing the roof, walls, and floor joists. In the last two years, wood prices have increased by 30%, making framing one of the most unpredictable costs of building a house nowadays.

Monthly price of lumber in the United States from January 2019 to March 2022
(in U.S. dollars per thousand board feet) – Source: www.statista.com

The cost of framing a house varies depending on the size of the house and the type of lumber used. The average cost of framing is between $20,000 – $50,000.

5) House Envelope

The house envelope cost includes installing the windows, doors, siding, and roofing. This is one of the most important steps in building a house because it protects the home from the elements.

The cost of the house envelope is determined by the size of the house and the quality of materials used. The average cost of a home envelope is between $40,000 – $50,000.

6) HVAC, Plumbing, and Electrical

Now it’s time to start working on the inside of the house. The cost of HVAC, plumbing and electrical work is also determined by the size of the house and the type of materials used.

The average cost of HVAC, plumbing, and electrical work is between $30,000 – $55,000. Keep in mind that this does not include light fixtures.

7) Interior Finishes

The cost of interior finishes includes insulation, drywall, painting, flooring, cabinets, countertops, interior doors, trim work, etc. This is one of the most fun steps in building a house because you get to personalize your space!

The cost of interior finishes is determined by the quality of materials used and the amount of finish work required. The average cost of interior finishes is around $110,000 but it will go up with the quality and uniqueness of the finishes.

8) Appliances and Fixtures

The cost of appliances and fixtures includes everything from refrigerators to toilets. The cost of appliances and fixtures is determined by the quality and the type of appliances you choose.

The average cost of appliances is between $5,000 – $10,000. However, if you choose high-end appliances, the cost can go up to $30,000.

The price of light fixtures is all over the place but do not underestimate them. They can get very pricey quickly as soon as you start looking at things out of the ordinary.

9) Landscaping & Driveway

The cost of landscaping will vary depending on the size of your lot and the type of landscaping you want. The average cost of landscaping is between $7,000 – $10,000 for basic grass and fence. If you start adding trees and flower beds or retaining walls you may be looking at a few more thousands.

If you want to add a driveway do your research before you choose the materials.  The cost of a driveway is determined by the size and type of driveway you want. The average cost of a driveway is around $7,000.

Considerations

Keep in mind that these are all average costs, so when you’re preparing your construction budget, double-check to make sure you’ve got prices for all of the work that will be needed to complete your house.

In addition to the cost of land, materials, and labor, there are also other associated costs that you’ll need to consider when building a house. These costs can include inspections and any other fees that are required to build your home in certain areas.

It’s always a good idea to have some wiggle room when it comes to money in case things cost more than you expected. When you’re getting construction loans or other financing, make sure to ask your lender how much they recommend setting aside for unexpected costs.

If you are building in a rural area there could be other extra costs involved such as the septic system, water well, and/or bringing electricity/gas/phone lines to the house. All these can easily add around $50,000 to the cost of building your home.

How to Pay the Cost to Build a New House

It’s very common for someone to be denied access to a conventional mortgage to pay for the cost to build a house.  It all has to do with the fact that, when you’re building a house from scratch, the lender has no way of knowing how much collateral they have in case things go south. So basically, they’re just looking out for themselves. As annoying as that may be, it makes perfect sense from their perspective.

The cost to build a house can be quite high, and most people will need to take out a loan to pay for it. If you do not have cash available then you will need a construction loan, which is a short-term loan used to finance the costs of building a custom home.

This type of loan differs from a mortgage, which is a long-term loan used to finance the cost of buying an existing home. One of the main differences between these two types of loans is that a construction loan is typically given at a higher interest rate than a mortgage.

After the house is completed, the future resident of the home must apply for a mortgage to pay for it. This can happen when the house is 95% finished. Check your lender for details regarding the stage of completion of your home before you can apply for a mortgage.

Conclusions

Building a house is a big investment, so it’s important to do your research and make sure you understand all of the costs involved before you start construction. With a lot of planning and patience, you can build the home of your dreams without breaking the bank!

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