How Much Does It Cost to Build a House?

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Contributor, Benzinga
October 30, 2023

Often, the best way to buy the home of your dreams is to build it yourself. Whether that’s a custom design, more space or you prefer a country location and a custom build, building a house can be fun and challenging. You’ll have to consider various construction costs, whether you’ll use a general contractor as well as interior and exterior finishes. All of this can affect your bottom line, along with the location. Read on to understand how much it costs to build a house, and start estimating your building costs. 

Factors Affecting House Construction Costs

From the location to the necessary site work to prepare for the home and foundation, you’ll want to consider the total costs before plunging in. Here’s what to consider in building costs. 

1. Location

Geographical location affects the cost directly first with land cost. You could buy a 1-acre plot in rural Iowa for $15,000, but an acre in downtown Honolulu could cost millions. Whether the location is urban or rural will affect property costs. 

But there’s another often overlooked building cost related to location. Construction materials and labor costs can vary widely by area. For example, in Hawaii, where many materials need to be shipped in by boat, you’ll pay more than in areas where the cost of living and construction materials are less expensive.

It’s important to research the cost of land in desirable areas and run the comps. If you can, start researching land at least a year before buying to get an idea of pricing. Generally, land sits on the market for a long time, but any under-market-value property can be snapped up quickly. If you understand the market, you’ll be able to recognize an opportunity when it appears. 

2. Foundation and Site Work

The cost of the foundation and site work can vary widely and affect the final build cost. Building on a flat plot with stable soil will cost significantly less than a slope with a 20% grade. If you need to level a plot or build retaining walls, expect to pay even more.

Average foundation costs in the U.S. are around $8,900. Still, you’ll need to add the cost of soil testing, clearing the land if necessary and other preparatory activities like excavation, which can cost $1,400 to $5,400. 

3. Size and Design

You will often hear builders quote a price in dollars per square foot. You’ll also see that on home comparison sites like Zillow. While the interior and exterior finishes and construction materials can affect the final price per square foot, the bigger the house, the more you’ll pay. There’s a direct correlation between square footage and overall expenses.

An average three-bedroom home of 1,000 square feet to 2,500 square feet could cost an average of $147,000. If the home size jumps to five bedrooms and 2,500 square feet to 3,500 square feet, expect to pay an average of around $375,000, or more than double the price.

4. Materials and Quality

The choice of building materials affects the cost. Homebuilders will have to make many decisions regarding the trade-offs between using high-quality materials and cost savings. For example, a Mexican tile roof may cost double a standard shingle roof. It seems obvious to go with the shingles for cost savings. 

If the shingles only last between 15 and 20 years while the Mexican tiles could last 100 years or more, the tiles are cheaper in the long run — especially when factoring in inflation. But can you afford them upfront? 

Home builds have hundreds of decisions like this, from framing in steel versus wood to siding, flooring and bathroom fixtures. Consider the maximum quality and durability for the price ratio you can afford, and aim for that.   

5. Labor and Contractor Fees

Labor in housing construction is a major expense. However, to complete the property to a high standard on a reasonable timeline, hiring reliable and experienced contractors is essential. If you hire a general contractor to manage the project, you can expect to pay between $3,000 and $52,000. 

Construction workers make a median hourly wage of just under $20, according to the Bureau of Labor Statistics. This can vary widely by area and the crew’s experience. You’ll need to talk to the general contractor to get realistic estimates on hourly wages and total costs for your construction project. 

6. Permitting Fees

Permitting fees affect construction costs. You may need building permits, excavation permits and an occupancy permit. On average, expect to pay between $1,200 and $2,000 for permits. 

7. Framing and Exterior

The expenses involved in framing and exterior finishing vary by materials used, the size of the property and the area of the exterior. A simple square home will require less siding and exterior finish than a home with many angles and sides, such as a home with a courtyard or other shape so common in modern homes. 

As a starting point, you can expect to pay an average of $20,000 to $50,000 for framing plus around $9 per square foot for siding. 

8. Plumbing, Electrical and HVAC

The significance of installing plumbing, electrical and HVAC makes a home livable. These installations also typically happen early in the construction process, before the walls are filled in or plastered. You can expect to pay an average of $13,500 to $64,000 for plumbing, electrical and HVAC. 

Here's the breakdown of averages:

  • $1,500 to $17,000 for plumbing
  • $7,000 to $13,000 for electrical
  • $5,000 to $34,000 for HVAC

9. Interior Finishing

Interior finishes plus installation costs can have one of the biggest impacts on final home prices. Consider the expenses for flooring, countertops, appliances, paint and fixtures before considering furniture costs. As a starting point, you can expect to pay an average of: 

  • $10,250 for flooring
  • $300 to $28,000 for painting
  • $11,000 for interior doors and finishes
  • $11,800 for cabinets and countertops
  • $3,200 for plumbing fixtures
  • $3,100 for light fixtures
  • $3,550 for appliances

That’s a total of $43,200 to $70,900 for interior finishes. 

10. Landscaping

Homeowners often overlook expenses for landscaping, but it adds to the curb appeal of the property and enhances your outdoor living space. If you plan to put in a pool, garden house and large patios, you’ll pay more. But even for basic landscaping like grass and simple gardens with a sidewalk or path to the house, you can expect to pay around $8,200. The final figure can vary widely depending on the size of your lot and your landscaping plans.  

How to Finance the Costs of Building Your House

The different ways to finance the cost of building your house include specialized mortgages, although the best option is usually a construction loan. A construction loan is a short-term loan used to pay the costs of custom homebuilding. After the build is complete, you can transfer the loan to a mortgage. Find some of the best owner-builder construction loans here

Final Home Construction Tips

Building a custom home can be a fulfilling way to create your dream home that’s built around your family’s unique needs. Whether that’s a rural retreat or in a bustling urban center, understanding local prices and the impact that many small decisions can have on your bottom line, both long-term and short-term, is essential. Learn more about how to save money for a house and start planning to build your dream home.

Frequently Asked Questions 


How long does it usually take to build a house?


According to the U.S. Census Bureau, it takes an average of seven months to build a house. That number can vary widely, and as anyone who’s built a house will tell you, it usually takes longer than you think it will. Allow a year in most cases to complete the build. 


Is it cheaper to buy an existing house instead of building it?


It can be cheaper overall to buy an existing home instead of building yourself, but you’ll need to consider individual preferences and needs. You should research local markets’ home sale prices to understand the best options for what you’d like to build or buy.


Can I build a house if I don’t own land?


In some cases, you can get a long-term lease for land that allows you to build a home. Check with a local real estate attorney to understand the costs, risks and opportunities in your area. 

Alison Plaut

About Alison Plaut

Alison Plaut is a personal finance and investing writer with a sustainable MBA, passionate about helping people learn more about wealth building and responsible debt for financial freedom. She has more than 17 years of writing experience, focused on real estate and mortgages, business, personal finance, and investing. Her work has been published in The Motley Fool, MoneyLion, and she regularly contributes to Benzinga.