Track homes completed and incomplete on a construction site.

Building your home may be a more affordable option than buying an existing property, depending on where you live and your preferences for the house. (Getty Images)

The purchase of a home marks a lifetime achievement, a testament to the American Dream. The building of one, though, might exemplify the pursuit of the American Dream even more with the added personal expression involved in home design.

“With a brand-new home, you can get it exactly the way you want it,” says Anthony Wilder of Anthony Wilder Design/Build Inc., based in Cabin John, Maryland.

Alluring aesthetically, building a home may also be a savvy financial decision. With housing inventory again tightening and stock aging across the country, new construction homes appeal to buyers perturbed by the lack of options on the existing real estate market.

How Much Does Building a House Cost?

According to the U.S. Census Bureau, in July, the latest month for which data is available, $313,000 marked the median sale price of newly constructed homes, which stood some $30,000 above that of existing residences. That $313,000 could serve as a gauge for construction costs that are otherwise hard to calculate due to their dependence on a slew of variables.

In its latest survey on how much a new home costs, the National Association of Home Builders states that, on average, almost 56% of the final house price stems from construction expenses and another 21% reflects the cost of the finished lot. Those shares, however, are from 2017, when the report came out, but are on par with the numbers released in 2011 and 2009.

The NAHB queried over 4,000 builders from across the country on the costs of the typical single-family home they constructed in 2017. Given that only a handful of them provided “usable responses” and that the cost of labor, materials and land widely differs across the nation, the NAHB survey is only a broad snapshot.

Moreover, it does not discriminate between the types of homes. Custom houses, built to a client's druthers, for example, are much more expensive than homes in planned developments, where builders follow several design plans with little room for personalization.

[Read: Everything You Need to Know About a Pending Home Sale]

How to Estimate Home Construction Costs

There exist several methodologies to estimate total construction costs. One way is to utilize the house’s square footage as a basis for expenses. Paul Emrath, vice president of surveys and housing policy research at NAHB, however, cautions that a price per square foot, which is often used for pre-existing homes, could mislead as economies of scale might distort the measure for new residences.

“Using cost per square foot can be useful as long as you've got a cost per square foot estimate that comes from a (comparable) home of about the same size,” Emrath says.

Tracking the costs of individual items – windows, timber and appliances, for example – is another, somewhat overwhelming method to assess costs. Yet another is to focus on major construction phases, which lenders use to pay out funds for further work if a construction loan finances the project. This is the method most builders rely on and the NAHB employs in its surveys.

Here are the factors that contribute to the total cost to build a home:

  • Architecture and design.
  • Permits and surveys.
  • Lot.
  • Foundation.
  • Framing and exterior finishes.
  • Major systems.
  • Interior finishes.
  • Finishing touches.

Architecture and Design

For custom homes, an architect fulfills a crucial role in creating a layout – a process that may take months and several thousand dollars. It may sound long and pricey, but an architect’s services usually exceed those of a builder or a general contractor when it comes to creating the blueprint of a house.

“It's very costly to modify (when already building) versus during the design phase,” says Jim Rill, founder and principal of Rill Architects in Bethesda, Maryland.

Permits and Surveys

Before any construction work may begin, a number of permits need to be secured. Building, electrical and plumbing are the major ones. Depending on the available utilities, some neighborhoods may also require gas and septic permits, among others. Moreover, any demolition of existing structures also calls for the appropriate authorization. Aside from permits, which come with post-work inspections, projects require surveys to ensure the envisioned design follows local building codes and restrictions. As a result, upfront costs can reach thousands of dollars.

[Read: How Do I Find My Property Lines?]

Lot

Unless you already own vacant land, the purchase of a lot may be a substantial expense. Still, the cost of land widely varies across the U.S. Generally, the closer the lot is to a city’s downtown, the smaller and costlier it is. It is also harder to construct on. Further complicating the process and potentially ballooning its cost, are basement excavations and lot design for proper drainage, as well as the removal of trees.

Foundation

The cost of the foundation depends on the materials used. Poured concrete, for instance, commands specialized equipment that makes it pricier than cinder blocks. Prefabricated foundations, which are built off site and then assembled after delivery, are another option that Wilder describes as sound and convenient, but expensive. Because of their modern design, which lacks footings or rebar-and-concrete blocks that thwart settling but obstruct the flow of water, pre-fab foundations tend to be drier than others. Regardless of their type, however, all foundations have to be sealed to prevent waterproof damage.

In 2017, NAHB pinned the cost of a concrete foundation at nearly $26,000 or almost 11% of the overall construction expense.

Framing and Exterior Finishes

At the framing stage, a house assumes its outer shell; walls begin to trace the layout, while a roof encloses it. Here, the kind of materials that cloak the walls and roof after sheathing, or the installation of panel surfaces, impacts the cost. Bricks and stone typically boast a higher price tag than lap siding, for instance.

The exterior of other homes in the neighborhood may have an influence on materials used for your house. This is a trend Emrath has seen unfold at various degrees across the country, where homeowners associations and lawmakers strive to preserve a “neighborhood character.”

Marking some of the priciest work on a new house, the NAHB estimates the cost of framing at a little over $41,000, and that of exterior finishes at about $33,000.

Major Systems

Plumbing, electrical and HVAC comprise the primary systems in a home, which demand specialized contractors. While not obligatory, they should succumb to independent inspections before walls cover the wiring and pipes, so that any potentially costly mishaps are identified and corrected.

In its survey, the NAHB gauges the installation of each system at about $11,000.

Interior Finishes

Turning a house into a home, the interior finishes range from wall paint to furniture. Today, Rill sees an increasing horde of clients drawn to smart-home features and upscale appliances.

“You could spend $35,000 alone on equipment for your kitchen (or just) on kitchen cabinets,” he says. “There (are) so many options and opportunities to spend money.”

Traditionally expensive to outfit, kitchens and bathrooms present two of the largest tickets on the interior-completion budget. Altogether, the latter could reach nearly $70,000, according to the NAHB.

Finishing Touches

Once a house is structurally complete, the land around it undergoes a transformation. After construction cleanup, a driveway emerges. So does landscaping, which may need to adhere to HOA guidelines. Decks and patios also materialize at this last phase of the project, which the NAHB puts at nearly $17,000.

[Read: What to Expect From the Housing Market in 2019.]

Ultimately, estimating construction costs is a grueling effort with little susceptibility to nationwide generalizations. Individual preferences – from the number of floors to the grade of finishes – skew any calculations, while the state of local markets further complicates that exercise.

To best evaluate how much it would cost to build your home, research local suppliers and builders and work with them to grasp costs in your area and for the kind of house you want – be it custom, pre-fab or tract.


The Best Time of Year for Every Home Improvement Project

A renovation project for each season

(Getty Images)

Homeownership comes with a never-ending list of home improvement projects, and being able to time them right can be tricky. Ultimately, the best time for a home improvement project is when you have the time. But if you’re eager to plan projects to set yourself up for success, consider which season has the right weather patterns, minimizes future maintenance issues and makes it easiest to hire professionals. Read on for the best time of year for 12 home improvement projects.

Interior paint

Interior paint

Close up of unrecognizable house painter pouring paint while preparing it for home decoration.

(Getty Images)

Best time of year: Winter

The benefit of painting inside is that you have air conditioning and heating. “We paint interiors all year-round because of that climate control,” says Tina Nokes, co-owner of Five Star Painting in Loudoun County, Virginia, which is a part of Neighborly, a network of home service providers. Your biggest concern when it comes to a quality indoor paint job is humidity – so if you’re in the middle of a humid summer, it’ll take longer for a room to dry and it will dry unevenly. If you’re worried about humidity levels inside, paint your interior rooms during the winter, when the air is driest.

Electrical updates

Electrical updates

Electrician cutting wires in home

(Paul Bradbury/Getty Images)

Best time of year: Winter

Electrical work can happen just about any time of year, unless it’s during rain or a thunderstorm, for obvious safety reasons, explains Dennis Burke, owner of Mr. Electric of Southeast New Hampshire, which is also a Neighborly company. What truly makes winter a winner for electrical updates is that you’ll be avoiding the bulk of competing homeowners. Burke says late spring and early summer see a big influx of requests from clients, as well as late summer as people go on vacation. “Labor Day to Thanksgiving is also really busy,” he says.

Building a deck

Building a deck

handsome young man carpenter installing a wood floor outdoor terrace in new house construction site

(Getty Images)

Best time of year: Winter

An outdoor project like a backyard deck seems like a natural undertaking for summer, but it’s actually just the opposite. Deck builders and contractors report that pressure-treated wood, which is best for building a deck, stabilizes best when humidity is low. Additionally, the increased sun exposure in summer can cause the surface of a deck to crack, and cloudier winter days help avoid early damage. If you live in a particularly cold climate, aim for early winter to avoid the bulk of snowfall and temperatures that are too cold for contractors to work outside.

Full-room remodel

Full-room remodel

New bathroom cabinets with granite countertopsBathroom renovation and granite installation

(Getty Images)

Best time of year: Winter or spring

Remodeling or updating a well-loved room in your home can happen any time of year, but it’s best to be proactive and avoid higher labor costs or jampacked contractor schedules during the summer months. HomeAdvisor reports that July is the busiest month for bathroom remodel requests, with 48 percent of homeowners indicating they’re ready to hire and start work immediately. Avoid the rush by scheduling your remodel earlier in the year.

Cleaning out gutters

Cleaning out gutters

Cleaning your gutters and inspecting your basement can help you become better-prepared for a disaster

(iStockPhoto)

Best time of year: Early spring and fall

The gutters along your roofline collect leaves, twigs and other debris over time. When they get too full, the drains can clog and cause water to sit along the edges of the roof and get inside the house or continue to weigh down the gutters. Avoid any problems by cleaning out your gutters in the fall, when leaves are most likely to make their way in, and again in early spring so the path for water is clear before April showers roll in. If you're not comfortable on a ladder or you have a high roofline, consider hiring professional help that will take proper safety precautions.

New floors

New floors

Man installing wood flooring in home.

(Getty Images)

Best time of year: Spring or fall

The best time to install wood flooring is during parts of the year with the least extreme conditions. In spring and fall, you'll avoid peak humidity and dry air, both of which can cause problems like bowing and warped wood or cracking in too-dry conditions. Plus, you can open windows to ventilate the smell of wood stain or carpet adhesive, and you’re least likely to have the heat or air cranking in spring and fall.

Updating a deck or fence

Updating a deck or fence

Staining a brand new fence. DIY home improvement concepts.

(Getty Images)

Best time of year: Spring, summer or fall

The wood on a deck may fare better in winter, but staining a deck or painting a fence often requires additional weather consideration. “Decks and fences are a little more finicky (than painting a house exterior). We need it to be even warmer, around 40 to 50 degrees,” Nokes says. A good deck staining or painting company will recommend a timeline specific to temperatures where you live to avoid an incomplete, delayed or flawed project.

Exterior paint

Exterior paint

Caucasian man painting house

(Getty Images)

Best time of year: Late spring, summer, early fall

New paint will freshen up the look of your exterior walls, and painting is a doable project for a decent chunk of the year. Temperatures have to stay above 35 degrees for exterior painting, so in the early days of spring and late days of fall, weather-dependent work may be delayed if temperatures drop. For this reason, Nokes keeps clients on a watch list: “If we get a warm snap, I’ll call them right away,” she says.

Home addition

Home addition

Renovate and repair residential house facade wall with mineral wool insulation, plastering, painting wall outdoors. Remodeling House Construction with asphalt shingles roof. House renovation.

(Getty Images)

Best time of year: Late spring, summer, early fall

For outdoor work, it’s best to avoid the seasons that will bring inclement weather and delay the project. Plan for the project to begin after the chance of snow in your region has passed, and shoot for a completion date before the frost returns in the fall to reduce the chances of delays. But be sure to schedule all professionals well in advance. In fact, Burke says a month to two months’ advance notice is often needed for electricians to complete an estimate, plan a contract and schedule work.

Roof repair and replacement

Roof repair and replacement

Installing new roof with  nail gun and shingles

(Getty Images)

Best time of year: Summer, early fall

It’s a given that you don’t want people working on your roof in icy or wet conditions. As a result, the best time of year for roof repair or replacement is also when the professionals are busiest. Be sure to plan roof replacement a month or two in advance to avoid having to wait with possible leaks causing damage to the inside of your home.

HVAC care

HVAC care

Hands Changing Furnace Air Filter

(iStockphoto)

Best time of year: Early fall

Any repairs to your heating, ventilation and air conditioning system should be done as soon as you notice an issue, but if you’re planning to do routine maintenance, schedule a professional long before you’ll need to turn on the heat. That way, any potential problems that could leave you without heat are found and fixed before the first cold nights of the season. The same goes for air conditioning in the late spring and summer.

New appliances

New appliances

(Getty Images)

Best time of year: Fall

Consumers can expect everything from washing machines and oven ranges to refrigerators to sport discounts leading up to the holidays. Even if you’re not updating your kitchen until May (and your home can accommodate an extra oven or fridge for five months), keep an eye out for deals. Stores that sell appliances like Sears, Lowe’s and Home Depot are known to regularly offer holiday weekend deals.

Read More

Tags: real estate, housing, housing market, home prices, new home sales, existing home sales, pending home sales


Dima Williams is a reporter and editor who covers the residential real estate industry with an emphasis on economics, policy as well as luxury. As a managing editor for a national real estate website and magazine, Williams extensively collaborated with top producing agents across the country to develop expert opinion pieces and advice articles. Connect with Williams on LinkedIn.

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