How Much Does It Cost to Build a House in 2022?

When taking their first step toward homeownership, prospective buyers are faced with a big decision: Build from scratch or purchase an existing home? The answer often depends on their desired features, budget, and finances.

According to the National Association of Realtors, the median sales price of existing single-family homes in the United States was $358,000 in December 2021, an increase of 15.8 percent from the previous year. For the same period, the U.S. Census Bureau and U.S. Department of Housing and Urban Development reported a median sales price of $377,700 for new single-family homes.*

For some prospective buyers, the cost difference can initially feel like a deal breaker. For others, it may be a worthy expense to build a brand-new home to their personal specifications.

To make the decision a bit easier, let’s break down the overall cost and see how your dollars are being spent should you decide to build new.

Cost per Square Foot of a New Single-Family Home

Per survey data from HomeAdvisor, the cost to build a new home can range from $117,971 to $450,345, with an average of $284,158. This amount can vary due to region, home type, size and desired home features or luxuries. New construction typically costs between $100 and $200 per square foot, but additions and customizations may quickly inflate the expense to $500 or more per square foot.

Pre-Construction Costs

A considerable amount of labor goes into obtaining the correct permits, developing a home plan, hiring a team, and preparing the lot before construction even begins. You can expect pre-construction considerations to make up about 10 percent to 25 percent of total project costs.

Paperwork: Plans, Permits and Cost Estimates

First, you should decide on a house plan. Whether you choose a popular design from a company or builder that provides house plans or hire an architect to draw up a unique custom home, just keep in mind that the more detailed and personalized the blueprints, the pricier it will be. House plans typically cost between $2,000 and $8,000.

After selecting and purchasing your home plan, the next step is to consult your builder or general contractor with the bid set in hand. The bid set includes all the relevant information your contractor needs, including the floor plan and exterior images or elevations of each side plus roof pitches, to give you a cost-to-build estimate. Your contractor will examine the plans, ask questions, and take notes to get a full picture of your dream home design.

Your contractor also should be familiar with local codes and the required building permits that you will need before beginning construction. Costs can vary, but you can expect to pay an average of $1,200 to $2,000 for a building permit. Other permits, such as for basements, electrical, HVAC and plumbing, may also be required.

Professional Fees

Depending on your chosen home plan and desired features, you will likely interact with several design professionals. Your general contractor (sometimes the same as your builder) serves as your project lead and point of contact and manages the other professionals on your team.

General contractors typically charge about 10 percent to 20 percent of the total construction cost. This is sometimes referred to as “cost-plus.” Experienced contractors will outline their payment plan and options in the initial contract prior to starting the job. A portion paid is usually paid upfront and the remaining balance upon completion, or payments are made before each new building phase begins.

According to HomeAdvisor, other professional hires may include architects ($125–$250 per hour), engineers ($100–$200 per hour), draftsperson ($50–$130 per hour), interior designer ($50–$200 per hour) and landscape architect ($70–$150 per hour). While you may not need all these services for your home, they are another potential cost to keep in mind and discuss with your contractor.

Land Purchasing and Lot Preparation

You will likely spend a large chunk of the overall project budget on purchasing land and preparing the lot. Depending on size, location and other factors, HomeAdvisor indicates a lot may cost anywhere between $3,000 and $150,000. According to the National Association of Home Builders (NAHB) “2019 Cost of Constructing a Home” survey, homeowners could expect to spend an average of $89,540 on a finished lot of 22,094 square feet.  You will probably find significantly cheaper undeveloped lots in rural areas but may end up spending more to install utilities.

If the site is not connected to utilities, sewer, or cable lines, it is considered an unfinished lot. To prepare to build on the land, you’ll likely be charged impact fees to connect to city sewers ($1,300–$5,000), the city electric grid ($1,000–$30,000) and city water lines ($1,000–$5,000).

Lots with less desirable conditions can pose additional problems and costs. You may need to have an expert test the soil before digging to prevent setting a foundation on heavily saturated soil or groundwater ($800–$2,100). Any uneven terrain, overgrown brush or trees may require tree removal or land excavation and grading ($1,500–$5,300). A land survey may also be required to obtain legal documentation of your site’s boundaries and topography before building on the property ($400–$700).

If your lot has an existing home on it, demolition costs can range between $3,000 and $25,000. If you can use some parts of the existing home on your new home or sell various materials, you could save some dollars in the process.

Residential Construction

The overall construction budget for your new home can be broken down into three major spending categories: materials, labor, and administrative items (including the design work and permits detailed above).

Materials Selection

Choosing your materials can really make or break your budget. Recent supply-chain issues and global shortages on materials have driven up prices while the market is in short supply. Consult with your contractor if there is a specific material that you want in your home. They may be able to share the best time to purchase, especially if you need to order months in advance to ensure timely arrival.

Material cost estimates can vary widely by home size, design, and expense for shipment or delivery to the site. Lumber, for example, may cost between $25,000 and $65,000 while concrete may cost between $1,000 and $10,000, according to HomeAdvisor.

Other important materials include drywall (approximately $10 per sheet), flooring ($1–$5 per square foot), siding ($2–$15 per square foot), insulation ($0.10–$1 per square foot), and roofing ($1,000–$3,000 total). Each of these materials has a high end and a low end in terms of type and quality. Determining which materials are worth splurging or saving on depends on your priorities and home design.

Labor Expenses

Labor costs are the third major expense to keep in mind. This will also vary by the size of your project, timeline, location, and access to quality materials.

In addition to the general contractor fee, there will most likely be added expenses from subcontractors. According to HomeAdvisor figures, a framer may cost between $7 and $16 per hour and roofers may cost between $5,000 and $10,000 for the completed job. Additionally, an electrician may charge $50 to $100 per hour and a plumber may cost $45 to $200 per hour.

Choosing the Right Builder

If you’re ready to learn more about building a custom home, let Dogwood help. We are a knowledgeable and experienced Aiken SC custom home builder, and we are proud to help Aiken residents make their dream home a reality.

*https://www.hud.gov/press/press_releases_media_advisories/HUD_No_22_016