The Ultimate Guide to Home Building Costs

Building a home is a dream for many, but understanding the costs involved can often feel overwhelming. Whether you’re a first-time home builder or looking to take on a larger renovation, it’s important to have a clear idea of what to expect financially.

Lately, skyrocketing building material costs and labor shortages have pushed home prices to all-time highs, which is why we designed this detailed guide to support you through every phase of new home construction expenses.
From initial planning to finishing touches, we’re here to ensure that you stay on budget and avoid surprises whenever possible.

New Home Construction Cost
Cost Estimates by Construction Phase
9 Tips for Estimating New Build Cost

New Home Construction Cost

The latest annual survey by the National Association of Home Builders shows that the average sale price of a single-family home is now $644,750 — the highest it’s been in the survey’s 24-year history.

More than half of the price, 60%, comes from construction costs.

While that figure gives a good overview of the industry, it’s important to remember that prices can jump quickly when customizations are added to a home project and materials are upgraded. Let’s dive into what factors have the biggest impact on the cost of building a new home:

• Location: Where you choose to build will have an impact on the cost of land and labor prices across building trades. Highly-sought areas typically come at a higher price point, as do remote build sites that require extensive development and longer transportation of materials.
• Material Prices: The cost of building materials can fluctuate due to supply and demand, availability, and overall economic conditions. Using premium materials will also drive up the overall cost of construction on your project.
• Finishes: The quality and type of finishes you choose for flooring, cabinetry, countertops, etc. can drive up the price, especially if you opt for custom features.
• Home Features/Amenities: Opting for enhancements like a swimming pool, smart home automation, or at-home gym can add up quickly. These amenities enhance the home’s appeal, but they come at a premium price.
• Standard vs. Custom Build Choices: Custom builds involve more intricate planning and unique materials, which add to the expense. On the other hand, standard home builds follow pre-designed plans, use common materials, and are typically easier to complete.

One of the most common ways to gauge the cost of new construction is by looking at prices per square foot. Explore the chart below for insights.

Average cost to build a new house by square footage

Cost Estimates by Construction Phase

Knowing the cost estimates for each construction phase can be a huge help while you plan and budget for building a new home. Here’s a breakdown of what you can expect during each portion of the project.

Phase 1: Pre-construction

Here’s a checklist of tasks to complete before breaking ground. These steps lay the groundwork for a successful overall build:

• Buying Land: Choosing and purchasing a plot of land involves finding the right location, size, and land characteristics — plus ensuring that you stay within budget.
• Picking a Home Plan: Selecting a home plan is all about choosing a design that suits your lifestyle, preferences, and budget. This can be anything from a pre-designed home to a complete customization. Costs depend on the complexity and square footage of the design and whether it’s standard or custom. 
• Paying Permit Fees: Construction on your home cannot begin before you receive permit approval from local officials. Permit fees cover the cost of reviewing and approving your home plans to ensure that zoning and safety regulations are followed. The cost of the permitting process includes multiple revisions of drawings, as well as architect and lawyer fees, depending on the complexity of the municipality’s process.
• Preparing the Site: This includes conducting soil tests, tearing down any pre-existing structure, bringing running water and electricity to the site, and providing an access road if necessary. The cost is about $50,000.
• Hiring Professionals: It takes a team of experts to make your home move-in ready. To ensure a seamless transition into your new space, it’s important to research these professionals and talk to others in your network about referrals.
  • An architect designs the overall layout and structure of your home. Cost will be dependent on their experience and the scope of the project. Expect to pay around $47,000.
  • A general contractor manages the entire construction project, including hiring subcontractors, arranging for permits, and directing day-to-day operations. Their rates typically range from 15% to 20% of the overall project cost.
  • A plumber will plan and execute systems such as water lines, drain lines, fixtures, and water heaters. Rough-in plumbing — or the first stage of installation before the final fitting process — costs an average of $6,000. You should expect to at least double that price before all plumbing work is complete.
  • An electrician will need to install electrical wiring, outlets, switches, and fixtures according to building codes. The cost is similar to other labor-intensive work, averaging $6,000 to start a new build and another roughly $6,000 to finish all installation efforts.
  • A structural engineer is responsible for ensuring the physical integrity of the home. They also oversee the design and construction of the most crucial aspects of the build; i.e. walls, floors, and the roof. Expect to pay in the realm of $5,000 to $8,000 for this work. However, this cost can be lowered or eliminated by hiring an architect who is a member of the American Institute of Architects (AIA).
  • A civil engineer plans and designs site infrastructure, such as roads, drainage systems, and utilities. The fee is comparable, or slightly lower, compared to a structural engineer.

Phase 2: Construction

During the construction phase, key elements come together to give you a glimpse of the finished project. Here’s a breakdown of these elements, along with examples and cost highlights:

• The foundation, including excavation, pouring concrete, installing footings and slabs, will range in price based on the size of your home. A majority of the costs associated with a foundation install goes to labor. Cost is about $20,000-$30,000
• Framing, or building the structural frame of the house with wood and steel, includes walls, floors, and roof trusses. The average cost is anywhere from $20,000 to $50,000.
• Building systems are the necessities that you’ll rely on day-to-day, such as plumbing and HVAC. The complexity of the systems in your space and materials they require can bump the cost up to the mid-$30,000 range for HVAC and $17,500 for plumbing.
• Exterior finishes, i.e. your windows and doors, siding, and exterior paint, are about 10% of the final cost. This typically translates to $80,000 to $100,000, depending on the materials and your design choices. State-to-state building codes and environmental standards will also have an impact on these prices.
• Landscaping, grading the land, planting trees and shrubs, installing lawns and irrigation systems are what will contribute to the all-important curb appeal of your new home. Together, these elements will cost several thousand dollars.
• Roofing, depending on the materials you choose for your location and climate, will cost you several thousand dollars. Most roofs consist of asphalt shingles, averaging $8,500.

Phase 3: Interior Home Finishing Costs

This final phase is when your house begins to feel like a home, incorporating all of the design elements that reflect your personal style. Here’s a breakdown of the key components and their cost highlights:

• Cabinets are another large expense that is often unanticipated. Though costly, this isn’t an area you want to cut corners. High-quality cabinets can significantly enhance both the functionality and aesthetic appeal of your space, providing lasting value and durability.
• Plumbing fixtures and rough-in kits will cost at least $5,000 depending on the quality and brand chosen, as well as the complexity of the plumbing system required for your home.
• Countertops can be installed in a range of materials, from budget-friendly options like laminate and granite to high-end choices such as quartzite or marble. Pricing will largely vary.
• Flooring options include hardwood, laminate, tile, and carpet, each with their own range of costs and installation requirements. The average price is about $3,000 to cover a 500-square-foot space.  This is another area that you don’t want to cut corners, solely based on the hassle to go back and re-do any work.
• Paint can dramatically alter the ambiance of your spaces. Costs vary based on the quality of paint, the number of coats required, and whether you’re doing the work yourself or hiring professionals.
• Lighting requires you to consider costs for fixtures, bulbs, and installation, as well as how they fit into your design scheme. You’ll need to think about this aspect throughout every room in the home.
• Interior doors are a good place to save a bit of money by choosing from pre-made options available at big box stores. Materials, styles, and whether they’re pre-hung — on a frame with hinges — or require more handiwork all have a role in the final price.
• Drywall is what will ensure smooth walls and ceilings. Because of the extensive surface area that needs to be covered, it can take up a sizable portion of your budget. Your builder will include the price of drywall in an invoice, meaning you don’t need to shop for this item independently.
• Fireplaces are highly sought for enhancing comfort and style, and are available in wood, gas, or electric options. For safety reasons, you’re going to want to leave this installation job to a professional. 
• Appliances include your oven, refrigerator, washer and dryer, and the like. These too are often purchased locally at chain stores, which carry many types and brands.
• Special design features and amenities, for example, built-in shelves or unique trim work, add a personal touch to any space. They come with higher price tags and should be considered as early as possible to ensure they integrate seamlessly — in both design and budget.
• Tile is historically popular in kitchens and bathrooms because of its durability and water resistance. Note that about half of the tile cost is related to installation, which can vary based on complexity and tile type.

Average national cost to build a new house per bedroom

9 Tips for Estimating New Build Cost

It’s clear by now that there are many factors you’ll need to consider when it comes to a house construction cost breakdown. Here are some of our top tips for estimating what’s ahead:

1. Pick a floor plan that checks all of your boxes: Start by selecting a floor plan that fits your needs and preferences. The size and layout of your home will significantly influence the overall cost, so choosing a floor plan early helps to keep your budget realistic. Review a preliminary plan set or study set closely before sending them to builders for a general cost-estimate.

2. Find the right builder: Research and choose a reputable builder who has experience with projects similar to yours. Talk to people around you about who they recommend and what their experience was like. A reliable builder can provide a more accurate estimate and help you navigate potential cost overruns. It’s advisable to get multiple bids as you fairly assess your local options.

3. Determine the quality, style, and features that you want: Having a vision, or working with a trusted architectural designer, will help hone your vision and keep your build on-track. Higher-quality materials, specific architectural styles, and custom features can increase costs, so having a clear vision will help in getting accurate estimates.

Learn more about how Abrigo Home can help you streamline construction and design efforts >> 

4. Get an estimated cost (per square foot) from your builder: This metric will help you accurately gauge the overall cost based on the size of your home and compare it to industry averages. An architectural designer like Abrigo Home can review and help you interpret proposals from builders before going under contract.

5. Understand pre-designed options, which can help save money in the long run by offering predictable outcomes. Custom designs tend to be more involved and labor intensive.

6. Leave room in the budget for additional construction costs that come with changes in scope, issues, or delays. Staying flexible is the key to handling surprises with ease and not derailing your goals.

7. DIY if and when possible. Painting and landscaping are a couple areas that homeowners tend to take into their own hands. Avoid taking on too much, though. You don’t want to try to save money just to have to pay a professional later to fix any mistakes.

8. Go for an energy-efficient home design to decrease utility costs. This can be achieved with high-quality insulation, energy-efficient windows, and appliances. 

We understand that building a new home is a big undertaking, and keeping track of all of the associated costs can seem like a daunting task. By planning ahead and budgeting for each stage of construction, you’ll be better prepared and less likely to hit unexpected bumps along the way. 

To make things even easier, check out our free Home Building Budget Template and keep your project on track without the stress.