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How Much Does It Cost to Build a New House?

According to Home Beautiful, the average cost to build a house in the United States was $329,000 in late 2023 and early 2024. However, this average represents a cost range that varies based on location, size in square feet and other factors. The median cost for an existing home in the U.S. in the first quarter of 2024 was $420,800. Depending on your location, this means building your dream home could be more affordable than purchasing an existing home. Here’s more information on the cost of building a house so you can make the best decision for your future.

Cost to Build by Square Foot

Cost by square foot breaks your total home cost down into manageable pieces. Introducing a common measurement — cost by square foot — can help you understand what size home you can afford and what type of finishes fit into your budget. House Beautiful reports that the average cost per square foot to build a house is $150. However, anecdotal estimates can reach up to $550 per square foot — again, it all depends on location and other variable factors. According to Architectural Digest, starter homes in 2023 cost $200 to $250 per square foot. By contrast, luxury properties cost around $400 per square foot in 2023. These numbers include both construction and design costs.

Cost to Build by Location

Apart from the size of your home, location is one of the most important factors in deciding the cost of building a house. Some states are more expensive to build in than others because of factors like labor costs, cost of materials and required permits. The cost of land can vary considerably, even within a state. For example, if you’d like to live by the ocean, costs will be higher because that area is more desirable. You’ll also need special structural elements to keep your home safe. Once you’ve chosen a location, you can begin researching the average cost per square foot for building a new home in that area. Deciding on location and size by square foot will give you a solid starting point for estimating the cost of your new home.

Variability in Costs

Although averages can give you a ballpark estimate for building a new home, be sure to consider variable costs. The total cost of building a new home can vary widely, depending on several factors. Every homeowner’s nightmare is that they’ll begin building and have unexpected costs. Although building costs vary, you can avoid surprise expenses with a little strategic planning. Start by understanding what’s involved with building a home:

  • Land costs
  • Home plans
  • Contractor fees
  • Construction materials
  • Permits and inspections

You’ll encounter different costs at each step of the process, from homesite prep to construction and design. The preconstruction and construction phases are typically the most costly. Something many new homeowners forget to consider is the cost of living off-site until their home is completed.

Land and Site Prep Costs

According to Architectural Digest, the most variable cost for building a home is site preparation. You may be surprised what you find once workers start digging, and getting your land ready for a stable home isn’t a step you can skip.

Factors impacting homesite cost can include:

  • Slope of land
  • Value by location
  • Trees, rocks and water
  • Distance from amenities

The type and location of land you purchase significantly impact your overall cost. If you’re building in a rural area, costs may be higher to run electricity, water and waste removal services to your home.

Permitting Costs

It’s important to factor all permitting and inspection costs into building a home. Although these costs aren’t typically expensive, there are several of them, and they can add up quickly. Here’s a quick list of some permits to consider:

  • Building permits
  • HVAC permits
  • Plumbing permits
  • Electrical permits

Permits allow your construction team to complete their work according to legal guidelines. After the work is complete, you’ll need to pay an inspector to come in and check the sewer, water and electrical connections. The total cost of permits and inspections can vary considerably, depending on the costs and regulations in your area. Before you begin building your home, ensure you understand the costs of permits in your area so you can include that in your budget.

Labor Costs

Depending on where you plan to build, the cost of skilled labor can vary widely. Labor costs can cover the following roles:

  • General contractor
  • Construction crew
  • HVAC professional
  • Plumbing subcontractor
  • Electrical subcontractor

In addition to the basics, you also need to consider architectural, landscaping and design fees. If you work with a real estate agent to find land, that will also factor into your home’s overall cost. Finding a trustworthy team to build your home is one of the most important decisions you can make during this process.

FAQs

Still have questions about how much it costs to build a new house? Here are several common FAQs about custom home builds.

Is Building or Buying a Home More Affordable?

It depends. The cost of buying a home vs. building one varies by location, labor costs, accessibility of materials and other factors. However, building a new home can be very affordable if you’re strategic with your research and budget.

How Do You Finance Building a Home?

Most new homeowners rely on a construction loan to build their homes. After construction is complete, this loan rolls over into a traditional mortgage, which you’ll pay until your home is fully paid off. You can talk to several banks about their rates to ensure monthly costs are within your budget.

How Long Does It Take to Build a Home?

Building a new home can take several months to a few years, depending on your budget, construction timeline, accessibility of materials and labor availability. It’s not uncommon for home construction to take longer than planned, but that’s less likely if you work with experienced professionals.

Build Your Dream Home With Keystone Custom Homes

At Keystone Custom Homes, we streamline the process of building your own home. When you work with us, you’ll have access to experienced professionals, quality work and a dream team who wants to support your journey while building a custom home you love.

We build communities of beautiful homes in Pennsylvania, Maryland and North Carolina. Since 1992, we’ve built homes for over 8,000 homeowners. Join our family and experience the benefits of working with Keystone Custom Homes. Find your dream home or build new in one of our beautiful communities. Let us help you create a place you’ll love to live!