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Cost of Building a House



Cost of Building a House

Here are some ways to estimate the cost of building a house.

 Contact Local Builders

Contact builders who build homes that are similar in size, quality and features of what you want to build. The builder can give you a ball park idea of what it would cost to hire them to build a home. A builder can tell you around how much per square foot they usually charge for a home. However it is probably just as important knowing what is included at that price. If you ask, some builders will provide you a list showing the materials they use to build the home.

Use Square Footage for Estimating Cost

Probably the easiest way to estimate cost is to look at newly constructed homes that are similar in size, style, quality and features of the home you want. Take the price of the home, deduct the price of the land and divide that amount by the square footage of the home. For example if the home is selling for $230,000 and the land cost $30,000 then the construction cost is around $200,000. If the home is 2,000 square feet then the cost per square foot is $100. You should do this estimate using several new homes in your area to get a ballpark square footage price.

The most expensive areas in a home are usually the bathrooms and kitchen. The amount of windows, and the size and quality of windows can also affect the cost. Vaulted ceilings and high roof pitches can increase the cost of a home. When using other homes to calculate an estimate be sure the home has a similar style and features of the home you plan to build. For example if you want 4 full baths and a whirlpool tub in the master then try to find a home with 4 baths and a whirlpool to base your estimate on. Also the cost of the kitchen can vary greatly depending on the size, materials, and features in the kitchen. Try to base your estimates on homes that have kitchens similar to what you want.

Two-Story Homes Cost Less

A two story home can be built on a smaller lot because it has a smaller footprint size compared to a one story home that has the same size. Because of this you may be able to save money on the size of the lot needed for your home.

Square Footage Cost of Small Homes Versus Large Homes

When determining a square footage cost estimate, it's important to use homes that are similar is size and quality to what you want to build. The cost per square foot is often higher for a small home when compared to the cost per square foot a larger home. Some parts of a home are more expensive (such as bathrooms, kitchen, and furnace). When building a larger home, the cost of expensive items is spread over more square footage and this is why a larger home may have a lower square footage cost than a smaller home.

Estimation Software and Services

Several of the stock plan companies offer an estimation service and for a small fee will provide an estimate on what it will cost to build a specific house plan in your area. There are also several companies that sell estimating software and your builder might have this kind of software. However, estimating software may be too expensive or complex for the average homebuyer to purchase. Estimating software often takes into account the typical cost of materials and labor in the area you want to build the home and can give a close estimate of cost. If you get an estimate by using software or an estimating service keep in mind it is only an estimate and your finished cost will likely be a little different. Some estimating software actually over estimates the cost slightly. One plan company I talked with said their estimates often come in around 5% over the actual cost. The software may be allowing room for inflation, cost over runs, or other errors and you may be able to build your home for less than what the software tells you the cost will be.

Lumber Store Material Estimates

Several lumber store chains have sample plans on display and estimates on cost of materials needed to build the plan. However the estimation usually doesn't include the cost of labor to build the home and usually only the main materials (such as wood, shingles, etc) is included in the bid. Usually other things such as the foundation, carpeting, and appliances are not included in the rough estimate shown for the sample plan.

Lumber stores will also give you a bid on materials if you take a material list to them. Some lumber stores will even take a set of plans and give you an estimate based on the materials they determine you'll need to build the home. However, if a lumber store does a take-off they usually don't guarantee that their material quantities are accurate and if you later determine you need extra wood or other materials then don't expect a lumber store to give you any compensation. Part of the materials needs will be based on framing techniques used and how efficiently your builder and the home design makes use of materials. If materials are wasted then the material needs may be greater than what a lumber store estimates.

You can use the lumber store prices to calculate an approximate price of the cost of building your home. To do this get the price of all the lumber (including interior and exterior trim, and doors and windows). If you multiply that price by 5 you will get a ballpark price of what it will cost to build the home. This is a ballpark price that includes the cost of labor, overhead and profit for the builder. The cost of the lot will need to be added on to the ballpark price to get an approximate total cost.

Size of Home

When building a home it's best to work with even numbers and have your home size rounded up or down to increments of 2 feet. This reduces wasted materials. Also, it's preferable to have the depth of your home be 32 feet deep or less. If you go over 32 feet depth, then your roof trusses may need to be specially designed and will be a little more expensive.

Shape of Home

Homes that have a rectangular or box shape cost less to build. Having more angles and corners in the shape of your home can increase the amount of labor and materials needed to build a home. Dome shaped homes also make efficient use of materials and tend to cost less than other shapes.


The more roof angles or the steeper your roof pitch is, then the greater the cost the roof will have.


The materials you choose can have a big impact on the price of the home. In general it costs less to use materials that are readily available in your area.

Cost of Changes

Preplanning is important when building a home. The cost of making changes during the design process can easily be 1000 times less then the cost of making the changes while a home is being built. For example it may only cost a few dollars for drafting changes to a plan during the design phase. However after the home is under construction it may cost several thousand dollars to make the same changes.

The cost of changing something can easily be 3 times as much as the cost of doing it right the first time. When you make changes you need to pay for the labor to undo previous work, labor to do the new work, labor for the original work, and the cost of wasted materials. For some types of materials you may need to pay a "restocking" fee to return an unused item to the store. You may also need to call back several subcontractors to redo work when changes are made.

Site Preparation

Preparing a site for construction can have a big impact on the cost of a home. Building on a flat lot will usually cost less. If you have to haul in lots of dirt, do a lot of grading, clear trees, or have large rocks blasted through then site preparations can become more expensive.

Reimbursable Expenses

Some items are difficult to calculate the cost of until the work is finished. For example the cost of digging a well may not be know until the well is dug and the cost will be directly related to how deep the well needed to be drilled. If large rocks are found while digging the foundation then this may be an added expense. A construction contract may have some items that are called reimbursable expenses and those costs may need to be added in to the final cost of the home.

Cost Overruns

Usually the finished cost of a home is more then the original bid price. Cost overruns occur from overspending the allowances, making changes, and having unforeseen problems. Proper planning can greatly reduce cost overruns. In general, it is a good idea to allow an additional 10% to cover cost overruns.

Inflation and Market Conditions

Usually the cost of building a home increases around 3% to 6% per year. If it will be several years before you plan to build, remember to include inflation into the cost estimate for your home. Local marketing conditions can also affect the cost. If there is high demand for labor and materials and a low supply the cost of building a home can quickly go up. When using other homes to compare prices or estimate costs then try to only use prices of homes that have sold in the last 6 months. Prices and market conditions can change quickly and you need to use recent prices to do cost estimates.

Holding Costs

Sometimes people buy land several years before they build a home. Owning land has holding costs such as property taxes and revenue lost from investing your money elsewhere. These costs are usually minimal because the land may also appreciate in value and property taxes are usually lower on undeveloped land. When building the home, you may have to pay interest on a construction loan and for electric utilities used while building the home.

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