How Much Does It Cost to Build a House?

Does Building Your Own Home Come at a Premium Price?

When you're looking to move into a home of your own, you could buy an existing property, or you could build a brand-new home. 

In many cases, buying an existing property costs less. However, building allows you to create your dream home, designed just the way you like it.

If you're considering building a house instead of buying a pre-existing one, there's one key question to ask yourself first: How much does it cost to build a house? 

This guide will explain typical costs when building a new home, helping you prepare for budgeting how much you'll likely spend on a new build.

Average Cost to Build a House

Building a new home requires you to pay for materials and labor.  The costs of both can vary substantially depending on where you are located, what type of builder you select, and what kind of house you're building. 

You can get an idea of the typical cost to build a new home by looking at some national averages. For example, the National Association of Home Builders reported the average total sale price of a newly constructed single-family home at $665,298.

This is based on a 2025 survey using data collected in 2024, and it includes the lot cost, construction costs, financing costs, overhead and general expenses, marketing costs, sales commission, and profit. The average construction cost alone, without the add-ons, was $428,215. 

Building a home can require careful budgeting, as well as lots of decision-making during the process. You need to make sure you are not just ready to be a homeowner, but also ready to take on the responsibility of working with your builder to design and create a home that will work for you.

Cost per Square Foot to Build a House

The size of the home you are building has a major impact on the cost of building a home. Larger homes obviously require more materials and labor. As a result, it can be helpful to look at the average cost per square foot.

According to the National Association of Home Builders, the average construction cost for a single-family home in the survey mentioned above was $162 per square foot. This is a considerable increase from $80 per square foot in 2011 and $114 per square foot in 2019.

Here's what homes of various sizes would cost to construct, based on this average cost per square foot. 

The example below is based on construction costs only and does not include other expenses like the cost of the lot; financing costs, overhead and general expenses,  or sales commissions. Construction costs account for around 64% of the total expenses when buying a new construction home, so your final purchase price could be substantially higher. 

Homes also have different finish levels that can affect the price to build. For example, a home with luxury marble tiles on the floor and a fully custom kitchen would cost much more than a basic home with vinyl tile and cabinets from a big-box store.

Architectural Digest estimates the finished cost per square foot for different categories of homes, with the results seen in the table below. 

Key Factors That Influence Homebuilding Costs

As you can see, there is a lot of variation in construction costs depending on what type of home you are building. Here are some of the key factors that can influence your final price tag for a new build.

Location

Where you live makes a big impact on the costs of construction, as things like permits, lots, and construction worker wages vary by location. 

For example, in a high-cost-of-living area, builders must charge more to make a profit, and in areas where hurricanes or earthquakes are the norm, the cost of complying with building codes designed to ensure safety may be higher.

Land

If you're building a home, you need a place to put it. Land costs can include not just buying a lot but also preparing your land to be the site of your new home. 

The costs of both the land itself and the site prep can vary. 

For example, buying an oceanfront lot in California will cost you much more than buying a lot in rural North Dakota. Likewise, buying an undeveloped wooded lot on a mountain would require more site prep than buying a lot in a housing development where the lots have already been cleared and connected to utilities.

Home Size, Style, and Scope

The home's size, style, and scope are key factors as well. A larger home and one with more detail will cost more. Homes that are more complex to construct also come at a higher price. A Victorian home with lots of exterior trim and unique architectural features will require more specialized labor and material than a tract home with few special design touches.

Building Materials

Building materials can include everything from the material used to frame the house, to the insulation used, to the type of piping and wiring, to the cabinets, flooring, and fixtures you need. High-end materials will obviously cost much more. Even something as simple as a faucet could cost under $100 to upwards of $5,000. 

Labor

You will have to pay for the work performed by the contractors and workers who construct your home. This can include paying for a general contractor, as well as for subcontractors such as plumbers, electricians, finish carpenters, and more. 

Typically, plumbing and electrical expenses account for a large portion of labor costs. In fact, the National Association of Home Builders estimated that plumbing costs and electrical costs each account for just over 6% of total construction costs.

Typical Home Construction Costs Breakdown

Here is how the cost of home construction typically breaks down, according to the National Association of Home Builders. 

• Permits and floor plans: Building permits typically account for 1.8% of construction costs and average $6,260. Architecture and engineering fees account for 1.5% and average $6,480. 
• Site preparation: The finished lot cost, including the land, prep, and financing, typically costs an average of $91,057 and accounts for 13.7% of construction costs. 
• Framing: Framing costs, including the roof, average $49,763 and account for 11.6% of construction costs.
• Exterior:  Exterior finishes average $57,510 and account for 13.4% of costs. This includes exterior wall finishing, and windows and doors, including the garage door.
• Interior finishes: Interior finishes account for around 24.1% of typical construction costs, with an average price of $103,391.
• Plumbing, heating, and electrical: Plumbing, electrical, and HVAC come at a total average cost of $82,319 not including fixtures, which means they account for around 19.2% of total construction costs.
• Appliances: Average appliance costs total $7,499 on average and account for 1.8% of construction costs.
• Landscaping:  Landscaping costs average $9,269 and account for 2.2% of total construction costs.

Should You Build or Buy a Home?

Deciding on whether to build or buy an existing home is a decision you'll need to make based on your preferences and your finances. To  make the decision, consider:

• Does it cost more to build a home or buy a home where you live? If building costs more, how much more, and are you willing to pay the premium to design your new home?
• What is your timeline? It can take months or even years to build a custom home, while buying a home makes it possible to move in more quickly. 
• Are there existing properties that meet your needs? If you are looking for something specialized, such as a home where you can age in place or a multigenerational property to live with relatives, you may have less choices to find an existing home that's a good fit. 
• Are you prepared for the building process? You may need to make many decisions during the build, and the final costs are far less certain because surprises can come up along the way. 

If you have the time, money, and desire, building your own home can allow you to create a place that is truly your own. 

However, buying an existing property can be cheaper, faster, and easier, and there are no surprises as to how the finished home will turn out so some people prefer this simpler process. 

How To Finance Building a House

If you are building a home, you will likely need to borrow to pay for it. There are different financing opinions for a new build that you can consider. 

• Home equity line of credit (HELOC):  A home equity line of credit is a flexible loan against the equity in your home. Freedom Mortgage can offer you a line of credit that you can draw from as needed to cover the construction process. Since you withdraw as much as you want from the line of credit over time, up to the limits, this can provide flexibility during the building process. 
• Construction loan: A construction loan is a short-term loan used to pay for building or renovating a home. Funds are released in stages as the construction progresses, and when it is complete, you pay it off with a standard mortgage. If your loan was a construction-to-permanent loan, your existing loan converts to a standard mortgage. 
• Home equity loan: A home equity loan also allows you to borrow against the equity in your home. You receive a lump sum up front and can use the money for anything you'd like, including building a new home or improving your existing property. 
• Personal loan: Personal loans are unsecured loans that you can generally use for anything you want, including a new build. You can borrow up to an amount your lender allows based on your credit and income, and you will receive the payment in a lump sum up front that you can use to pay for the construction of your house.

Cost of Building a House FAQs

Still need to know more? Here are the answers to some frequently asked questions about the costs of building a house. 

Is It Cheaper to Build a New House or Buy an Existing One? 

Traditionally, it is cheaper to buy an existing home than to build one. However, the specific cost difference, if any, can vary by location, housing market conditions, and builder incentives available. 

Can You Use a Traditional Mortgage to Build a Home?

Generally, you cannot use a traditional mortgage to build a home because a traditional mortgage is designed to pay for an existing property that appraises for enough to meet your lender's loan-to-value requirements. 

However, there are specialized construction loans available from some mortgage lenders that you can use to build a home. You can then convert them to a permanent loan if your lender allows, or refinance into a standard mortgage when the build is complete. 

How Can You Get an Accurate Cost to Build a House?

The best way to get an accurate cost to build a house is to talk with builders in your area. You can request an estimated cost and, if you are ready to move forward with building, a detailed cost breakdown of how much building your dream home would be.

Final Thoughts: How Much It Costs to Build a House

Building a new home can be rewarding and allow you to create your ideal “dream” place to live. However, you need to understand the costs and make sure a new build is affordable for you. You'll also need to explore your financing options and make sure you can qualify for the funding you need.

Freedom Mortgage can help you to understand your options for financing new construction or the purchase of an existing home. Give us a call today to talk with a mortgage professional about what your options are for saving the most money and getting into the home of your dreams.