How Much Does It Cost to Build a House in the U.S.?

Is it cheaper to build your own house than to buy a brand-new home already on the market? According toMarch 2023 data from the U.S. Census Bureau, the average sales price of a new single-family home was $562,400, up from $464,200 in 2021 (median sales price was $449,800) and the average cost to build a home was $392,241,according to the National Association of Home Builders. On the surface, that's a price difference over $150,000.

But it's important to note that those numbers aren't an apples-to-apples comparison. The average sales price of $562,400 was what homebuyers paid for both the house and the land it's sitting on. The $392,241 average cost of building a home was only the "contract price" charged by the contractor to build the home. The cost of the land, if needed, was separate.

What does that mean? It means that if you already own land, then it's most likely cheaper to build your own place. But if you don't own land, you might not save much, if any, compared to buying a newly built home. When TheNational Association of Home Builders(NAHB) surveyed its membership in 2022, it found thatthe average lot cost nearly $114,622for an average lot size of 17,218 square feet or 16,000 square meters, the smallest square footage since 2011. This is big increase in cost and decrease in size from 2020, when the average lot cost was $90,00 for an average lot size of 22,000 square feet or 2,045 square meters.

Keep in mind that the costs listed in this article are for a contractor-built home. In other words, we're assuming that you are hiring a general contractor to build the home. General contractors add 20 to 30 percent to the total cost of building a home because that's how they're compensated for hiring and managing all of the subcontractors.

Twenty to 30 percent is a lot of money! You may be tempted to act as your own general contractor and potentially save tens of thousands of dollars, butit might not be worth it. First of all, it's a huge time commitment to act as your own contractor, and if you're new to construction, you're likely to make a few big and expensive mistakes. Not to mention, some subcontractors will charge you more than they would a professional contractor, so those 20 to 30 percent savings may get eaten up by higher materials and labor costs.

According to the most recent NAHB survey in 2022, thetotal construction costfor a 2,561 square-foot (238 square-meter) home was $392,241 on average. That's the highest in the history of the NAHB conducting this survey.

Again, we should note that those costsdo not includepurchasing the land or lot, and that the numbers below areaveragesthat fluctuate significantly by geographic region.

That said, here's how the NAHBbreaks down the cost of building a 2,561 square feet homeby each stage of the construction process. (This square footage is the average size of a single-family home in the U.S., according to the NAHB):

As you see above, the most expensive single category when building a home is "interior finishes," which encompasses every door, lighting fixture, toilet, countertop and dishwasher in the house. This category is so expensive because it includes so many different components, each potentially having a substantial cost, said Paul Emrath, vice president of surveys and housing research for the NAHB, whom we spoke with in 2021.

"There are certainly ways to economize and spend less than the average home builder," said Emrath. "Choose a less expensive countertop material, spend less on interior trims or maybe forgo a fireplace."

In the end, it comes down to your personal preferences and your budget. You can easily spend more or less than the national average on interior finishes but beware of "upgrade creep." Every time you say yes to a contractor's suggestion for a slightly more expensive appliance or plumbing fixture, it's going to add up.

That's a good question and the not-so-helpful answer is: sometimes. It is very difficult for even the experts to predict what building material or construction component will increase in price in the near future. For example, no one saw the COVID-19 pandemic coming or the ensuing shortage (and skyrocketing cost) of key materials like lumber.

While global pandemics are thankfully rare, price fluctuations are not, said Emrath. "Some materials ship internationally, like concrete," he says. "A few years ago, we saw a shortage of concrete when the Chinese economy surged and they were simply consuming a lot of the international shipping capabilities."

"Lumber and ready-mix concrete prices were extremely volatile and experienced high peaks in 2022, which can help to explain these subcomponent increases from the previous year's survey," said a 2023 NAHB press release.