Cost to Build a House

Summary: How much does it cost to build a new home? Knowing the current cost to build a house before you build or buy a new home can help you modify your house plans to meet your budget.

The most frequently asked question and the most searched for category on my web site Build Your Own House - Home Building is, how much does it cost to build a house?

If I told you that the current national average cost for labor and materials to build a new house is $79.67 per square foot does that encourage you to build your own? I certainly hope so, for it is always a good time to build your own home.

Of course land is not included in the $79.67. (Source: NAHB Economics Group. NAHB = National Association of Home Builders)

Keep in mind that $79.67 is an average cost to build a new home. It includes tract homes at $50.00 per square foot as well as Custom Homes at $200 or more per square foot.

Custom Home
Custom Home

Note: I go into detail on Cost Estimating on several pages on this web site because over 30 years in the home building business has taught me that nothing about home building is more important than knowing how to estimate the cost to build or remodel a home.

As I wrote in my book Be Your Own House Contractor, a very quick and easy method to check out the cost of different styled and different sized homes in different cities and states is to find a new home being built by a professional builder that is for sale and that is similar in size, style and quality to your ideas for your dream house and do the following:

Take the sales price of that builder's house and deduct the land cost, real estate commissions, and 25 percent builder profit and overhead and you'll have the real or true cost to build that house on that lot.

Note: Different styles, different quality, different sizes, and different locales will give different results. Explore this critical concept with the FREE Construction Estimating Software and review some of my examples in "Cost to Build by State".

The land cost may be a bit tricky to determine, but there may be a similar lot in the neighborhood, a real estate agent can find out for you, or you could even call the builder.

You could even check property tax records as all homes, even used homes, have the site value broken out separately on tax records.

Now you simply divide the "cost to build" by the square footage of the heated area of the house and you'll have the cost per square foot.

To obtain the square footage of that particular house, check the sales literature, Realtor information, Tax records, or, call the builder.

Square footage refers to the heated (livable) area of a house, but ironically it is determined by measuring from the outside surface of exterior walls! For example: a simple house that measures 40 feet X 30 feet = 1200 sq ft. No deduction is made for the thickness of walls.

Note: When you start your planning and start calculating your home building budget, remember that if you are successful in keeping your land costs at 25 percent of your budget, you will have 75 percent of your budget left for the cost of building the house.

Take that 75%  and divide by the cost to build per square foot for your locale and you will now know what size square foot house you can afford.

Now you can start looking at house plans by square footage, and of course, by style or design.

Read all my estimating pages, especially the Cost Estimating page and the Cost Estimating Explained page for more information on learning how to do a really good job estimating the cost to build your dream home.

You can do it! Carl Heldmann