A new home is probably the biggest expense you will ever face, whether buying or building from scratch. If you opt to build your new home, there are many associated costs. In what can be a highly stressful experience, it is better to be well prepared. Creating a budget forms part of those preparations; to do so, you need to have a rough idea of what each aspect of the home will cost you.
In this article, we take data from the National Association of Homebuilders (NAHB) to break down all the expenses of building a new single-family home. This is based on the average size of a home in 2022, which stands at 2,561 sq. ft. It is worth keeping in mind that costs can vary substantially from state to state.
How Much Does it Cost to Build a Home?
According to the latest Construction Cost Survey by the NAHB, the total national average cost to construct a new single-family home is $392,241. In the graphic above, you can see the different areas of construction grouped by color, including: site work, foundations, framing, exterior finishes, major systems rough-ins, interior finishes, final steps, and others. It is important to note that this does not include the cost of the lot of land, yet it does include labor, subcontractors, and material costs. While this is a national average, it is also subject to change due to inflation and the costs of materials, both of which have been volatile recently. It is important to factor in the current state of inflation and material prices when undertaking your project.
Biggest Cost Factors
The most significant expense comes down to interior finishes, making up 24% of the overall cost. This is partly due to the number of different aspects this includes, from appliances and plumbing fixtures to flooring throughout the home and cabinets and countertops. This is closely followed by framing, making up 20.5% of the overall cost, which also includes trusses, sheathing, and steel. This is an increase from 17.4% in 2019.
The framing itself has the highest individual cost, with an average of $60,831. With lumber prices being so volatile throughout 2021 and 2022, there could be room for some savings here from 2023 onwards as costs begin to resemble those pre-pandemic. The second biggest expense is associated with site work; excavation, foundation, concrete, retaining walls, and backfill. The next costliest factors are electrical ($23,892), plumbing ($22,706), and HVAC ($21,845).
10-Year Cost Increase to Build a Home
As we can see in the graphic above, there has been a 59% increase in the cost to build a single-family home over the last 10 years. In 2013, the national average to construct a house was $246,453, whereas a decade later it has risen to $392,241. Since 2017 the cost has been steadily increasing. However, there was a huge jump between 2019 and 2022, with costs going up by a massive $95,449 in 3 years.
Consider Your Options
There are both pros and cons whether you decide to buy or build your own home. Probably the most imposing factor on your decision will be the cost. Despite high mortgage rates and sales prices, in general, it may still be cheaper to buy an existing home. However, if you decide to embark on the home construction process, it is essential that you have the costs of all the different factors clear. This way, you can stick as close to your budget as possible and plan for any fluctuations in costs, such as those as materials.