Building a house is a big undertaking. There is a ton of preparation and planning involved, and it rarely goes exactly as planned. But if you’re considering building a home, knowing the average cost to build a house is an important piece of the puzzle.
Whether you’re considering building a spec home and selling it, designing your dream home, or building a small place and retiring in it, you need the facts. Let’s dive in.
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How to find the average cost to build a house
If you’ve searched the internet for the average cost to build a house, you’ve probably found a lot of conflicting information. Each organization collects different data, and that data skews the numbers one way or another. Some outlets are just relaying the information entirely incorrectly.
The National Association of Homebuilders (NAHB) is the source used for the data in this article. The NAHB consists of over 140,000 members working in the home building industry. That’s a pretty reliable source.
According to NAHB’s most recent Construction Survey, the average cost to build a house was $296,652 in 2019. This cost takes into account site work, foundations, framing, exterior finishes, major systems rough-ins, interior finishes, final steps, and miscellaneous other charges noted as “other.”
Along with the cost average, the NAHB also collects data on home size. The average size home under construction in 2019 was 2,594 square feet. That’s a pretty significant drop from the peak of 2,802 in 2015.
Understand that this is an average, and here are some major factors that will decide how close to the average your project will come.
Some areas of the country are more expensive to build than others. For instance, the cost to build in the Northeast is considerably higher than the cost to build in the south. The weather plays a significant role in this, as the building season is significantly shorter than the year-round building that occurs down south.
Here’s a rough look at the difference between regions, per square foot:
- Northeast: Around $156 per square foot
- West: Around $159 per square foot
- Midwest: Around $129 per square foot
- South: Around $110 per square foot
Finishes and materials
Finishes and material choices have a significant impact on the average cost to build a house as well. High-end materials like marble, hardwood wood, custom cabinetry, and custom woodwork will all throw the average cost to build a house out the window.
Also, if you consider the current cost of lumber, the average cost to build a house is likely to jump significantly this year. The NAHB also tracks lumber pricing, which has quadrupled in the past five years. NAHB’s Twitter account had this to say about lumber pricing:
“This is directly impacting #housingaffordability. Builders are paying so much more for lumber and those costs are being reflected in home prices. You can’t build a $250,000 home when the lumber cost is suddenly $36,000 higher.”
That Tweet should give you some insight into how the cost of lumber is affecting home prices.
To better understand how the NAHB average works, it’s helpful to dissect the total price. If you can do some of this work yourself, there’s a lot of room to save some money.
Before the building can start, you’ll have to prepare the site. This usually includes pulling permits, clearing trees, grading the property, water and sewer inspections, and any associated architectural or engineering costs.
The average cost of site work is $18,323.
Beyond the typical site work, excavating for the foundation, as well as any retaining walls required has to occur. Depending on where you live, the foundation might be a simple slab or a full-height basement.
Digging, pouring, and backfilling for a foundation averages $34,850.
Once the foundation cures, it’s on to framing the actual house. This stage includes framing the walls, ceilings, roofs, and stairs throughout the home. It also includes sheathing, any structural steel work, and other odds and ends.
The NAHB states that the framing stage of the project will cost an average of $51,589.
Exterior finish is technically the next stage, but it’s realistically ongoing while other projects are occurring. This stage includes the exterior windows and doors (including the garage door), siding or other wall finishes, roofing, and other smaller jobs like gutters.
Exterior finishing will cost an average of $41,690.
Mechanical and electrical
The mechanical phase of the project gets pretty expensive because you’re calling in trade-licensed professionals to install advanced systems. Between paying for the plumber’s, HVAC tech’s, and electrician’s experience, you’re also buying expensive equipment.
The mechanical and electrical phase will cost an average of $43,668.
The cost of interior finishing can be killer, but this stage encompasses quite a bit. This is when drywall goes up and gets taped and painted, trim and doors are hung, and cabinets and countertops go in. It’s also when flooring and fixtures are accounted for.
This stage of the project goes for an average price of $75.259.
Most of the house is on its way to being finished at this point, but there’s some final buttoning up to do. Landscaping, outdoor structures like decks and patios, site clean-up, and other costs associated with the end of the project fit in here.
The final steps average around $11,156.
Other miscellaneous costs
Plenty of other little random things come up through the project, and they all tally up. Also, you can consider the punch list items under “other.”
The “other” costs associated with building a home will average around $11,156, according to the NAHB.
To GC or not GC? That is the question
Each of those costs listed above includes the cost of materials and the subcontractors’ cost to build or install with them. It also provides for the cost of a general contractor, which is spread out over each phase. If your state allows you to act as your own GC, you could save quite a bit of money.
If you act as your own GC, a large portion of your duties will be lining up subcontractors. You’ll have to find them, prequalify them, accept bids, and schedule them to work around each other. If that sounds like too much work, it might be worth hiring a GC (though you should still prequalify them, as well).
The importance of prequalifying contractors
Prequalifying your general contractor or subs is incredibly important. You want to make sure that the companies working on your project are qualified and financially sound. When you hire a general contractor, you need to ensure that they’re fiscally responsible because, ultimately, it’s your property on the line.
If a general contractor doesn’t pay the subcontractors they hire to build your house, there’s a real likelihood that the sub is going to file a mechanics lien against the property. If you’re unable to rectify the situation and the general contractor doesn’t make good on the payment, the sub can foreclose on the lien, which may force the sale of the property.
While you can’t guarantee anything, checking a contractor’s Payment Profile can provide some insight as to how they treat their subcontractors. You’ll be able to look at their payment score, past projects, the liens filed against them, and their most common contract terms.
If you notice there are too many payment disputes for your liking, it’s probably a good idea to move onto another general contractor.
Building a house isn’t cheap — but it could be a great way to save money
Ultimately, spending around $300,000 to build a house isn’t cheap. But, it is a far cry from the average sales price of $485,128 (according to the NAHB). If you’re able to handle some of the GC duties, you’ll stand to save even more.
However, if you’re taking on the duties of a general contractor on your home build, remember: If you don’t prequalify your contractors, you might end up spending more than you bargained for.
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