How Much Does It Cost To Build A House From Scratch?

Are you thinking about building a house from scratch because you're ready to move into your dream home, but you can't seem to find it on the market? Building your house is a great way to create a custom space that perfectly suits your needs, but it can come with a hefty price tag. The average cost to build a house in the United States is $289,874, which breaks down to a 2,000-square-foot home costing $150 per square foot, according to Berks Homes. As with any project, the price can vary, typically between $148,574 and $431,913, but depending on your location, you may need to pay more or less than this range.

The cost of building a house from scratch is determined by various factors, including what type of custom build you want to do, set up costs such as permits, and construction costs, although there are hundreds of other aspects involved. Because building a home can be a financial burden, consider taking a few steps before pursuing the process, such as paying off your debt, creating a budget, and saving at least six months of expenses in an emergency fund. This will help ensure you are in the best financial place to build a house from scratch.

There are many factors that go into the cost of building a house from scratch. When you are paying anywhere from $80,000 to upwards of $1,000,000 for a home, it's essential to make sure you are prepared for the factors that influence the overall cost. Quicken Loans outlines the main factors that go into the cost of building a house.

Plot of land

The first factor to think about when building your house is where you will build it. Typically you will need to purchase a plot of land, which can cost anywhere from $3,000 to over $150,000. Finished land will have water lines, sewers, and electricity and will be more expensive. Unfinished land, typically found in rural areas, won't have those amenities and will generally cost less. Keep in mind that emptying the land will have its own cost associated with it and can be over $2,000 per acre to clean if it is heavily forested.

Permits and regulations

One of the essential steps of building a house is to ensure that you have the correct building permits and follow the regulations for constructing property set by your area. Some licenses you may need to build your house include building permits, basement permits, electrical permits, HVAC permits, or plumbing permits, all of which have an associated cost. The least expensive permits, electrical and plumbing, can be anywhere from $10 to $500. The more costly licenses, such as a basement permit, can be as much as $2,000.

Labor costs

Unless you are planning to physically build your house yourself, and even if you are, you will need to hire a contractor. A typical general contractor who oversees construction will charge 10% to 20% of the construction cost; they will also hire subcontractors who specialize in specific areas, which will also be an added cost.

Foundation

Foundation is the first step of building your house, and it can have a hefty price tag. There are several types of foundation, each varying in cost: Two popular foundation types are concrete slab foundation, costing $5,200 to $13,000, and basement foundation, costing $30,000 to $70,000.

Framing

Framing creates your house's structure, making it a necessary expense in your home build. In addition, framing acts as a support for your house's windows, doors, walls, and roof, making the $20,000 to $25,000 cost a worthwhile expense.

Major systems

Other high costs that go into building your house are the major systems, including electrical, HVAC, and plumbing. These are all necessary for your house to function correctly, but the price will vary greatly depending on the size and type of systems you are installing. All these significant systems can cost $30,000 to $75,000 to install.

Exterior

Installing doors, roofing, walls, and windows is considered exterior work; Other items in this category may include walkways, patios, or driveways, and each will have its own associated cost. Overall, this category can cost you anywhere from $40,000 to $60,000.

Interior

The final step of your house build will be the interior finishes such as cabinets, countertops, appliances, and much more. Depending on your preferences for the finishes and if you are choosing top-of-the-line appliances, this category can cost $50,000 to $75,000.

Building a house is no easy task, and there will always be additional costs that come up or expenses that you didn't consider when budgeting for the new construction. Building a house is an expensive project, and it is even more costly if you add additional features such as smart home features or elaborate landscaping.

Building materials

A factor that you may not have considered when building your house is the cost of housing building materials. Quicken Loans explains that certain building materials, such as lumber, have soared in prices in recent years: Lumber costs alone can be over $30,000. Other building material costs to keep in mind are concrete, roofing, siding, drywall, and flooring.

Landscaping

One area where you can cut expenditures while building your house is landscaping. Many people do put time and money into landscaping, though, and the costs can significantly add to the house building prices. For example, a driveway can cost around $7,000, a porch, deck, or patio can be $3,000, and final cleanup expenses of all this work can cost you another $3,000, according to Ramsey Solutions.

When you choose to build your own house, you can choose from several options. Specifically, you can go three different routes when deciding to build your house from scratch, each of which varies in price. According to Estes Builders, you can do a personalized home, an on your lot builder construction, or a design-build.

Personalized house

Personalized homes are built in a neighborhoods owned by a bigger building company. These builders will often provide a few unmodifiable floorplan options, but allow you to personalize flooring, cabinetry, lighting, and other fixtures. These houses are the cheapest option if you are looking to build your own house, although the price will vary depending on location, size of your house, and the builder.

On your lot builder

If you already own a plot of land, choosing an on your lot builder is a good option. You will be able to choose from several floorplans provided by the builder, but keep in mind that these floorplans will leave little room for changes, although adding additional features is possible. With on your lot builders you will be limited to the suppliers that your builder has relationships with when it comes to choosing finishes.

Completely custom

A team of architects and designers will help you completely customize a home if you take this route. You can change anything about these homes so they fit your unique needs, including floorplan, exterior and interior design, finishes, fixtures, and more. Completely custom builds are the most expensive option, and Hood Homes Blog explains that you will typically need to put down a 5% to 10% deposit, buy the plot of land, or pay fees before building can begin.

There are tons of options when it comes to finding an amazing house: You can buy a townhome or rent a single-family apartment. Of course, everyone has these options, but building it from scratch can really help you create the home of your dreams, per American Family Insurance.

Customized house

The main reason to build a house from scratch is that it can be customized to fit your needs. For example, if you need a one-story place that is wheelchair accessible, it is easily created by building your house from scratch. Moreover, you can choose just about everything that goes into it and create a home that works well for you.

Less stress in a competitive market

The house building process is stressful; no one will deny that. But when deciding whether to build a house or buy a house, it's important to think about how much stress also goes into purchasing a house. When homes are selling quickly, competition can be fierce, and you may find yourself in a bidding war. Or you may not even be able to find a house you like in your ideal location. But, on the other hand, you don't have to worry about these stresses when building a house.

Brand new house

Another reason to build a house from scratch is that it will be brand new, meaning it won't need any renovations or repairs for several years. This is perfect if you are starting a family or starting a new job that won't allow you the time to take on home renovations.

You may still be feeling torn at this point about whether or not to build your house from scratch. The cost can be high, but there are so many benefits to building your home that the high price is worth it to some families. American Family Insurance explains some advantages to building a house from the ground up.

Cost-effective

Even though building a house is an expensive endeavor, it can be considered more cost-effective than buying an older property. The initial cost of building a house will be larger, but you won't have to worry about repairs, updating, or remodeling for a long time. Plus, new build houses are more desirable and will likely sell at higher values.

Move-in ready

Another significant benefit to building your house from scratch is that it will be move-in ready. This means that there will be nothing you need to do to make the place match your style. The paint colors, flooring, and hardware will all be chosen by you before moving in, so there will be no updates or renovations for you to do.

Better technology

Better technology is the last benefit of building your house from the ground up. Newer houses tend to include smart home features such as security or additional convenience features. Not only do they make your life a little bit easier, but they may also get you a discount on your homeowners' insurance.