How much does it cost to build a house?

If you’ve been looking for a home but haven’t found the perfect one, you may be wondering what it takes to build your own new home. Building a house may be cheaper than you think. There are also several funding options. However, supply chain disruptions and labor shortages caused construction costs to skyrocket during the pandemic, driving up prices and timeframes.

How much does it cost to build a brand new house?

According to HomeAdvisor data, the average cost of building a single-family home in 2022 was $284,764. However, their prices range from as low as $110,765 to as high as $459,152. Prices vary greatly depending on the region of the country being built and the specific details of the home plan.

New construction costs per square foot by region

According to HomeGuide, the average construction costs nationwide are:

• Northeast: $155 per square foot

• West: $131 per square foot

• Midwest: $109 per square foot

• South: $100 per square foot

So if you’re looking to build a 2,000 square foot house in the South, you can expect it to cost about $200,000. Note that these figures only consider construction costs. The price of land to build on is not included.

Breakdown of housing construction costs

To estimate how much it will actually cost to build your new home, you need to consider a few key points. Here is a breakdown of some of the costs that may be included in your construction budget. All prices are based on building a 2,000 square foot home.

before construction

Before you can start working on your home, you must obtain the proper permits and pay a fee to your city or local authority. You will also need to hire architects and engineers to plan your house. All of these costs vary by location, but you can expect to spend about $4,220 for permits and about $1,000 to $2,000 for planning and specifications.

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foundation

The foundation of your new home is a major part of the process and can be a significant part of the overall cost. Excavation costs about $3,000 and foundation work about $9,260.

exterior

Once you have your house framed, you need to complete the exterior of your house with a roof, siding, windows and doors. The cost of each of these items may vary depending on the materials selected. However, expect the roof to average about $13,760, windows and sliding doors about $3,000, and standard doors throughout the house to cost an additional $4,760. A stucco cladding averages about $16,000. The cost of siding varies greatly depending on the area and type of material.

home system

The infrastructure that heats the house and supplies water and electricity is essential. We plan to spend over $7,000 on heating and ductwork, over $18,000 on plumbing and sewer requirements, and about $8,000 on electrical wiring.

interior

From insulation to walls, cabinets and flooring, home interior finishes are one of the most expensive parts of a project. The cost of gypsum wallboard in a new home is about $12,000. Prices for cabinets of various styles, from basic to luxurious, can range from $9,000 or more. Likewise, the cost of flooring varies greatly depending on the material, but usually costs at least $5,000.

outdoors

Most suburban homes have a driveway and walkway to the front door and may also include a deck or patio and some form of landscaping. These features can be added quickly. The driveway and sidewalk alone cost about $6,000. On average, installing front and backyard landscaping costs him an additional $3,451, according to HomeAdvisor.

labor

Labor costs are one of the most important costs involved in building a home, and one of the most difficult to measure. The final price tag varies greatly with each new home plan and the amount of work involved.Labor costs often make up about 30-50% of a home’s total construction costs, according to HomeAdvisor.

Expect to pay for a long list of subcontractors and professionals to help complete your home project, including roofers, electricians, plumbers and flooring experts.Labor costs increase during the pandemic Did. This is due to renovation projects due to an increase in the number of homeowners. Mischa Fisher, Angi’s chief economist, said:

land

Of course, before you start building your new home, you’ll need a place to put it. Land costs associated with building a new home typically include the purchase price of the property and land preparation such as tree felling and land clearing.

Like many other factors associated with building a new home, the cost of land varies. According to HomeAdvisor, these costs vary greatly depending on the lot’s size, location, and whether it’s already connected to utilities. Based on these factors, you may spend between $3,000 and $150,000 on land acquisition.

Is building a house cheaper than buying one?

It’s actually the other way around. In general, building a new home tends to cost more than buying an existing home. According to HomeAdvisor’s 2022 report, a builder can expect to spend about 5% to 10% more per square foot of her than the buyer.

Buying an existing home and simply renovating it to suit your needs can add value per square foot, but how much you save depends on its condition and many other factors. “Depending on the location and size of the home, buying and renovating an existing home is probably cheaper than building a home in many areas,” Fisher says.

“If you want to live in a home that doesn’t necessarily need a renovation upgrade this year, you can save more money buying a home than building one,” says Thomas Jepsen, founder of the website Passion Plans. increase. Help consumers build their dream homes.

It’s also important to think about your priorities, says David Logan, senior economist and director of tax and trade policy analysis at the National Association of Home Builders. Newer homes tend to be larger and more customized, but suburban land is cheaper and easier to obtain, so it’s often farther away from city centers and public transportation.

Financing options for home construction

Once you’ve determined that the construction costs are worth it, the next step is to consider financing options for your new home. There are several options available, many offering competitive interest rates and attractive incentives.

home construction loan

The most common form of financing to build a house, a homebuilding loan, is designed for exactly this purpose. Mainly he has two types.

• From construction to permanent: A construction-to-permanent loan is a single loan that covers both land and construction costs, and is eventually converted to work just like a mortgage.

• Construction only: Also known as standalone construction loans, these finance the construction of your new home only. This would require you to take out two separate loans (this one and the mortgage), and potentially higher fees and interest rates. This type makes more sense if you currently own a home and plan to sell it and use the proceeds to pay off the loan on your newly built home.

personal loan

You probably won’t be able to cover all the costs of building a house with a personal loan. For most people, the loan amount will be much lower than the cost of housing. However, you can still pay for specific projects using this method.

For example, if you have already set aside a certain amount of money to build a house, but need additional funds for landscaping, a personal loan can help. Keep an eye on your finances and make sure you’re not overcommitting.

home equity loan

If you already own a home and want to build a new one, consider using a home equity loan for your first home to finance all or part of your second home. The amount you can borrow depends on your current home equity. If you own it outright, you may be able to finance most of your new home.

Once construction is complete and you move into your new home, you can use the money from the sale of your first home to pay off your home equity loan.

Home Equity Line of Credit

A Home Equity Line of Credit (HELOC) is another good option to help cover the cost of building a home. Similar to a home equity loan, you borrow against the equity of your current home to finance your new home. The difference is that a HELOC works more like a credit card than a lump sum loan, allowing you to borrow from your line of credit as needed, up to the approved amount.

It also gives you more flexibility, letting you choose how much you actually borrow from your HELOC, and you can pay it back and borrow again if you want. This is a great advantage when building a new home, as costs often fluctuate and additional, unexpected expenses can arise at any time.

Tips to save money when building a house

The best way to save money on building a home is to get multiple estimates for every step of the process. Talk to multiple realtors, architects, builders, and designers and ask each for a written estimate. If one quote is significantly cheaper than the rest, find out why before signing with a dotted line. You don’t necessarily have to choose the cheapest option. That can leave a poor home that requires frequent quick fixes and expensive additions that weren’t included in the original estimate.

You can also save money by doing some of the work yourself. For example, instead of hiring a designer, he chooses the interior finishes himself. You’re responsible for choosing everything from flooring to paint to countertops, so be prepared to invest a significant amount of time if you choose this route.

Frequently Asked Questions

• Which is cheaper to build or buy a house?

  It is generally cheaper to buy an existing house and renovate it to your liking than to build a house from scratch. According to his 2022 report for HomeAdvisor, savings are between 5 and 10 percent per square foot.

• What type of house is the cheapest to build?

  Usually less than 600 square feet, so-called tiny houses are one of the cheapest types of housing you can build. HomeAdvisor says construction costs range from $30,000 to $60,000, but average about $45,000.

• How can I finance the construction of a new house?

  A home construction loan is the most popular way to build a new home. You may also be able to cover at least part of your expenses with a personal loan, home equity loan, or home equity line of credit.

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