How Much Does It Cost To Build a House—and Is It Cheaper to Buy or Build?

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How much does it cost to build a house? According to the National Association of Home Builders, the median price of constructing a single-family home is $289,415, or $103 per square foot. Just keep in mind, the cost to build a home can vary widely based on where you live. Why does building a home cost so much? Let’s break down the costs.

The main costs to build a house

  • The shell of the house: walls, windows, doors, and roofing. These all can account for a third of the home’s total cost: $95,474.
  • Interior finishes: cabinets, flooring, and countertops. These can eat up another third of the budget, averaging $85,642.
  • Mechanical (plumbing and heating) runs around 13% of costs, or $37,843.
  • Kitchens and bathrooms are the most expensive rooms to build. Why? The average cost for finishes like cabinets and countertops alone is $16,056. So if you’re looking to save money, ask yourself whether you really need that third full bathroom, or will two plus a half-bath do?
  • Architect and engineer drawings will run about $4,583.

Additional costs to build a house (not included)

The expenses don’t end there. Here are a few extra costs you’ll need to be aware:

  • The cost of a plot of land to build on averages $3,020 per acre. The average home is built on only 0.2 acres.
  • Excavation and foundation work are by far the most variable cost. You never know what you’re going to find until you start digging—be it bad soil or massive boulders. If excavation and foundation work goes relatively smoothly, the average cost for both is $33,447.
  • You’ll need a building permit, which averages $908 nationally.
  • Other costs include land inspections ($4,191) and an impact fee, levied by the government to cover the costs a new home will incur on public services like electricity and waste removal ($1,742).

Advantages of building a house

You can buy an existing single-family house for a median price of $223,000, or $66,415 less than building one. You will also save yourself the headaches that inevitably come with construction.

Building a house does have its advantages, though. Everything will be new, meaning no costly repairs in the near future. Plus, you get to design your home to your exact specifications. If you have very clear ideas of how you want your home to look, this blank slate could be worth every penny.

Is it cheaper to buy or build a house?

It’s smart to weigh the pros and cons of new versus old construction—and the price you pay for construction costs versus an existing home is only the beginning.  There are 2 things to especially consider: the upfront costs of buying verses building, and the ongoing maintenance costs.

The upfront costs

If you buy an existing home: The median cost of buying an existing single-family house is $223,000. For the average 1,500-square-foot home built before the 1960s, that comes to about $148 per square foot. That said, the exact price can vary widely based on where you live.

If you build a new home: Building a house will set you back an average of $289,415. That’s $66,415 more than the cost of an existing home!

Still, you’ll get a lot more for your money. For one, new construction is usually more spacious, with a median size of 2,467 square feet—so the cost to build per square foot, $103, is actually lower than that of existing homes.

Another advantage is you pay for only what you want, whereas an existing home may have interior and exterior features (e.g., a finished basement or a basketball court) you’ll pay a premium for, even if you don’t want them. But if an older house happens to be your dream home the way it is, that may be the more bargain-friendly route.


If you buy an existing home: Older homes have more wear and tear, which means certain things may need more maintenance. The cost of this upkeep isn’t cheap, so make sure you know the age of the main items. You also may want to start changing things, even if they are still functional.

If you build a new home: Considerably less upkeep is one of the primary reasons to build your own home. Plus, sometimes the entire home is protected for up to 10 years because a builder generally offers a construction warranty. That can make up for some home construction costs per square foot that you paid by opting for a custom home.


If you buy an existing home: A major perk of older homes is mature landscaping. The U.S. Forest Service estimates strategically placed mature trees can add tens of thousands of dollars to a property’s value and save up to 56% on annual air-conditioning costs.

If you build a new home: Builders often do little or no landscaping to new construction. It may take thousands of dollars—and many years—to get the yard you want. For instance, one 6- to 7-foot-tall red maple will cost about $120 (if you plant it yourself), which will then grow 2 to 3 feet a year. According to HomeAdvisor, the average cost of adding complete landscaping is $3,219.

Energy efficiency

If you buy an existing home: The latest U.S. Census found the median age of American houses to be 36 years. Older construction means dated windows and appliances, or dollars flying out the window on wasted energy expense.

If you build your own home: Recent construction almost always beats older homes in energy efficiency. Homes built after 2000 consume on average 21% less energy for heating, which translates into reduced energy expense every month – even with the higher square footage in many newer homes.


If you buy an existing home: The nice thing about old homes is that there’s context to your purchase: You can research the home’s previous sale prices, as well as prices of similar homes in the area (known as comparables, or comps) to get a feel for whether prices are rising or falling in your area. If the prices for your home and others in the area have been steadily rising, odds are decent that the trend will continue, which bodes well for you if you decide to sell later on.

If you build a new home: New house construction, particularly in up-and-coming neighborhoods, can be more of a gamble. Without a proven track record of lots of comps, there just aren’t enough data points to really know what could happen down the line. That said, if you pay reasonable home costs when you build a home, and your local community is thriving, you should be able to get a good sales price for your home down the line.

Article originally appeared on Realtor.com.

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