How much does it cost to build a house?
How much does it cost to build a house?

If you’re looking for a home but haven’t found the perfect home, you might be wondering what it would take to build your own brand new home. Building a home can be cheaper than you think, and there are several financing options available to help. However, construction costs have recently skyrocketed due to supply chain disruptions and labor shortages, so prices – and lead times – are rising.

How much does it cost to build a new house?

The average cost to build a 2,600 square foot single-family home in 2019 was $296,652, according to a National Association of Home Builders (NAHB) Survey.

According to HomeAdvisor databuilding a home in 2022 can range from $117,050 to $451,362, with the national average standing at $283,984.

Prices vary greatly depending on the region of the country where you are building. And supply chain shortages have driven up the cost of everything from lumber to appliances, which will impact the overall cost of building your home.

Cost of new construction per square foot by region

Here are the average construction costs across the country, according to Home Guide. So if you’re looking to build a 2,000 square foot house in the South, you can expect it to cost around $200,000. Note that these figures only take into consideration the cost of construction. They do not include the price of the land on which you are going to build.

  • Northeast: $155 per square foot
  • West: $131 per square foot
  • Midwest: $109 per square foot
  • South: $100 per square foot

Home construction costs, broken down

You will need to consider a number of factors to estimate the true cost of building a new home. Here is a breakdown of some of the costs to include in your construction budget.

Preconstruction $18,000
Foundation and framework $87,000
Outside $42,000
Home systems (electrical, HVAC, plumbing) $40,000 to $45,000
Interior $75,000
Exterior (entrance, landscaping) $20,000
Labor $40 to $80 per square foot
Earth $90,000

Source: National Association of Home Builders


You will need to obtain the appropriate permits and pay fees to your city or municipality before work on your home can begin. You will also need to hire architects and engineers to make plans for your home. These costs all vary by location, but the average total is around $18,000.

Foundation and framework

The structure of your new home is a significant part of the cost and can be a significant part of the total construction price. All in all, you’re looking at around $87,000 for the foundation and framing.


You will need to complete the exterior with a roof, siding, windows and doors once your home’s frame is in place. The average cost is around $42,000.

Home systems

The infrastructure that heats your home and provides water and electricity is essential. Most owners spend between $40,000 and $45,000 to have all of these components installed.


From insulation and drywall to cabinetry and flooring, finishing the interior of your home is one of the most expensive parts of the project. The national average cost is $75,000, but that can go up significantly depending on your buying decisions.


Most homes have a driveway and may also include a deck or patio and some form of landscaping. These features can add up quickly. Homeowners spend an average of $20,000 in this category.


Labor is one of the biggest costs involved in building a home – and also one of the hardest to measure. The final price will vary greatly depending on the plans for each new home and the amount of work involved. HomeAdvisor indicates that labor often accounts for around 40% of the total cost of building a home.

Expect to pay for a long list of specialist experts to help you complete your home project, including roofers, electricians, plumbers, flooring specialists and more. A 2020 NAHB survey found that 69% of home builders use between 11 and 30 subcontractors to build an average single-family home, with the average being around 24 different subcontractors per home.

Like many other costs associated with building homes, the cost of labor has increased during the pandemic thanks to more homeowners undertaking renovation projects. “Labour costs haven’t increased as much as input costs, such as lumber, but they are higher,” says Mischa Fisher, chief economist at Angi. “You may also face long wait times for high-quality tradespeople due to high demand.”


Of course, before you start building your new home, you will need a location to set it up. Land costs associated with building a new home typically include the purchase price of the property as well as land preparation, such as tree felling or leveling.

Like many other factors associated with building a new home, the cost of land can vary significantly from location to location. According to the NAHB, the average cost of a finished lot of about 22,000 square feet is around $90,000.

Is building a house cheaper than buying?

Building a new home tends to cost more than buying a used property, but how much more depends on many factors. And the cost of many basic home building materials has increased dramatically during the pandemic. For example, according to data from home renovation site fixerwood costs have increased by 430% between 2020 and 2021, reaching an all-time high.

“While it depends on the location and size of the home, buying an existing home and renovating is likely cheaper than building in many areas,” Fisher says. “In many markets, wood still costs 200-400% more than at the start of the pandemic. Even in the most expensive metro areas, average prices for existing homes probably haven’t risen near that level.

The amount you will save by buying an existing home rather than building one depends on the type of property you are buying and its condition. upgrades, there’s a lot of money to be saved by buying a home rather than building one,” says Thomas Jepsen, founder of Passion Plans, a website that helps consumers build their dream home.

It’s also important to think about your priorities, says David Logan, senior economist and director of tax and trade policy analysis at NAHB. New homes tend to be larger and more personalized, but they are also often farther from town centers and public transport because land is cheaper and easier to acquire on the outskirts.

Financing options for home construction

If you’ve determined that the construction price is worth it, your next step is to explore your financing options for building your home. There are several options available, and many offer competitive interest rates and attractive incentives.

Loan to build a house

By far the most common form of financing the cost of building a home, home construction loans are designed for exactly this purpose. There are two main types:

  • Construction to permanent: This is a one-time loan that covers the cost of land and construction, possibly working similarly to a mortgage.
  • Build only: Construction-only loans, also known as stand-alone construction loans, only finance the construction of your new home and require you to take out two separate loans, which can lead to higher fees and interest rates. This type might make more sense if you currently own a home and plan to sell it and use the proceeds to pay off the loan on your newly built home.

Personal loan

You probably won’t be able to finance the entire cost of building a home with a personal loan – the loan amount will be capped for most people at well below the cost of a home. But you can use this method to pay for specific projects.

For example, if you have already secured some financing for the construction of your home but need additional financing for landscaping, a personal loan might do the trick. Just keep an eye on your finances and make sure you don’t overcommit yourself.

Home Equity Loan

If you already own a home and want to build a new one, you might consider using an equity loan from your first home to finance all or part of your second. The amount you can borrow will depend on the equity in your current home. If you own it, you may be able to easily finance the majority of your new home.

Once construction is complete and you move into your new home, you can use the money from the sale of the first home to pay off the home equity loan.

Home equity line of credit

A home equity line of credit (HELOC) is another good option for financing the cost of building a home, provided you have significant equity. Like a home equity loan, you’ll borrow against the equity in your current home to get financing to build a new one. The difference is that a HELOC acts more like a credit card than a lump sum loan, and you’ll be able to borrow against the line of credit as needed up to the amount you’re approved for.

You will also have more flexibility and be able to choose how much you will actually borrow from a HELOC, and you can repay it and borrow again if needed. This is very advantageous when building a new home, as costs often fluctuate and unexpected additional expenses can arise at any time.

Tips for saving on building a house

The best way to save on building a home is to get multiple quotes for each step of the process. Talk to several real estate agents, architects, builders and designers and ask each for a written estimate. If one quote is significantly cheaper than the others, find out why before you sign on the dotted line. You don’t necessarily want to choose the cheapest option; it could leave you with a poorly built home that needs frequent emergency repairs or expensive additions that weren’t included in the original quote.

You can also save money by doing some of the work yourself. For example, instead of hiring an interior designer, consider choosing the interior finishes yourself. Just be prepared to invest a lot of time if you decide to go this route, as you’ll be responsible for choosing everything from flooring to paint to countertops.

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