The construction costs of building a home are about 35% cheaper than buying an existing new home, but this can change depending on the price of materials, finishes, and more.
Thanks to HGTV’s constant stream of charming home inspiration, most of us have the custom build bug. After spending so much time indoors in recent years, it’s easy to see why the idea of building a home to meet our exact needs and preferences is so appealing.
The rising home prices may also have you wondering whether it’s worth pursuing a custom built home. The median price of a new single-family home was $450,600 in April 2022 — that’s up 16% from a year ago when the home sale price was $376,600.
If you’re strategic, it can cost less to build your own house, and you’ll end up with a home that perfectly meets your needs. But if you choose to invest in the finest building materials or a design-savvy architect, you’ll likely find that the custom build costs much more than an existing home, even a new construction.
How much it will cost you to build a custom home depends on how large you want the home to be and the types of features and upgrades you choose. To get a baseline idea of what it may cost to buy a home, you can expect to pay between $100 and $155 per square foot.
You can expect to pay between $251,000 and $390,000 to build a home of average size — 2,512 square feet (according to 2022 quarterly stats from the Census Bureau).
Where you live and what current supply and labor costs are can also affect how much you’ll spend. For example, spending $250 per square foot would bring the total cost of building your home closer to $600,000.
The cost of building a home comes down to materials, labor, flat fees for permits, as well as land. These costs can rise substantially if you choose to build a really luxe home or hire a fancy modern architect who charges steep fees. There are also factors you can’t control, like the recent unforeseen volatility of lumber prices, spurred by the coronavirus pandemic.
The material cost of building a home in 2022 is $331,896. This is the price of a 2,594 square foot home, based on a study by the National Association of Home Builders, which we’ve adjusted to account for inflation.
Here is a more detailed breakdown of average costs that go into building a house:
Keep in mind that there are a lot of factors that can decrease — or increase — the costs of building your house when it comes to the materials. For example, vinyl siding will cost less than stucco or brick; laminate floors will cost less than wood; and any high-end interior finishes will cost you extra.
If you need help making your vision come to life, you can choose to hire a custom home designer, but it will cost you a pretty penny. Architects and designers are paid an average of 8% to 15% of your total construction costs, so hiring one would mean you’ll pay anywhere from $26,000 to $50,000 based on our example. This could cost even more if you hire a well-known architect who charges higher fees.
Don’t forget that building your own home means you have to buy land, too. While buying land can be easier than buying an existing home, it won’t necessarily come cheap depending on where you live. An acre of land may cost less than $2,000 in New Mexico, but closer to $200,000 in New Jersey.
Fortunately though, you don’t need a full acre of land to build a house — the average lot size is 0.37 acres (or 16,032 square feet according to Census data) — but depending on your desires for green space, a yard, or even a pool, you may want more.
Read more about how much an acre costs.
In a dream world, we would all build custom homes to meet our exact preferences. However, building your own home isn’t always all it’s cracked up to be. There are some key advantages and disadvantages worth considering when deciding whether or not you should build a home, especially if it's your first home.
A custom built home can be a good investment since people like new and unique homes, but if you go too far with customizations that are purely suited to your distinctive tastes, then you may have a harder time finding a buyer down the line.
Related: Learn about homeownership and wealth.
Whether or not buying a house or building a house is a good idea depends on your situation and personality. It can be very time consuming and stressful to build a home from scratch, and you’ll need to be a shrewd planner and decision-maker.
The perks that come with building your own house that looks and function exactly how you want can be tempting. Unfortunately, that dream comes at a cost. Building a house can be cheaper under the right circumstances, but you need to have the knowledge and insight into finding the right people and materials to make the equation work. Most people probably don’t have these connections and won’t want to deal with the hassle of shopping around to find the best deals on quality labor and supplies for every aspect of their house.
If you have ample financial resources, patience, and a place to live while you build (no set timeline to move by), then you may find a custom build is worth all of the extra work. Otherwise, the convenience of an already built-home may win out over customizations and design.
If you really want your home to have a custom look and feel, you can try buying a fixer-upper and renovating it, that way you don’t have to start entirely from scratch. (Be forewarned though: renovating an existing house can also get costly.)
You can also consider buying a modular home, which is cheaper than a traditional home but can be customized to your liking.
If you’re looking to to buy a house — including a new construction — Orchard can help. We can even help you line-up closing and put in a non-contingent offer if you're buying and selling at the same time.
When you list with Orchard, we’ll get your home show-ready and make repairs to increase your home’s value at no upfront cost.
Orchard guarantees your home will sell, so you can buy your next one worry-free.
We provide peace of mind that your home will sell, plus list your home on the market to maximize your earnings.
Use our home sale calculator to estimate your net proceeds.
Our Home Advisors are experienced local agents who know how to sell for top dollar and help win your dream home.
All Orchard Home Advisors are experienced agents who know your local market inside and out. Request a consult today.
Did you know cash offers are 4x more likely to be chosen by a seller? Let us help you make one on your next home.
Get the most accurate free home valuation — in minutes
Orchard Home Loans shops the market to find your best rates.
A cash offer is 4x more likely to be chosen by a seller. Get qualified today.
Make a cash offer now, and Orchard will sell your old home after you move.
Tell us your must-haves to see personalized home recommendations that meet your criteria.