The real costs of new construction + 6 tips for building on a budget

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Susan Meyer

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  • Licensed Insurance Agent — Property and Casualty

Susan is a licensed insurance agent and has worked as a writer and editor for over 10 years across a number of industries. She has worked at The Zebr…

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Beth Swanson

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Beth joined The Zebra in 2022 as an Associate Content Strategist. She is a licensed insurance agent whose goal is to make insurance content easy to r…

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Planning for a new home

When it comes to owning your dream home, building it yourself gives you the chance to customize it exactly to your liking. From designing the foundation and layout to choosing the finishing touches, you’ll be able to create a one-of-a-kind house that’s perfect for you. With so much room for customization, it’s a good idea to get a full understanding of all expenses and budgets before starting. To help you thoroughly consider the cost of new construction, we’ve rounded up some of the major expenses that can quickly snowball if you don’t plan for them. Plus, learn what goes into home insurance for a new construction.

Keep reading to find out how much it costs to build a home and all the hidden expenses that come along with it. If you’re familiar with the costs of construction, jump down to the infographic to get some tips for reducing costly home expenses so you can build within your budget.

How much does it cost to build a home in 2021?

The National Association of Home Builders found that the national average cost to build a typical single-family home is just over $392,000. Although this number may seem cheaper than buying in today’s hot housing market, this total doesn’t include expenses like buying land, finishing a lot and financing it, among other expenses. With the various additional costs included, the average sales price of a new construction is brought up to over $600,000.[1] 


How to estimate the cost of building a home

Home costs can often be estimated by the size of the house. The number of bedrooms can be used as a guideline for construction costs. New construction average prices for 1-, 2-, 3- and 4-bedroom homes are listed below, but continue down to the next section for more specific ranges based on square footage.[2]

  • 1-bedroom home: $195,000
  • 2-bedroom home: $305,000
  • 3-bedroom home: $420,000
  • 4-bedroom home: $560,000

Cost to build a house by square foot

The average cost to build a house ranges from $100 to $200 per square foot. Depending on your location and level of customization, this range can jump up to $400 to $500 per square foot or more. The U.S. median for single-family homes was reported to be 2,261 square feet, meaning that a typical home would cost anywhere between $226,100 and $452,200.[3] Take a look at the breakdown of home sizes below for estimated construction costs.

Average new construction costs by square footage
House size Average new construction cost
800 sq. ft. $80,000-$160,000
1000 sq. ft. $100,000-$200,000
1200 sq. ft. $120,000-$240,000
1500 sq. ft. $150,000-$300,000
1800 sq. ft. $180,000-$360,000
2000 sq. ft. $200,000-$400,000
2200 sq. ft. $220,000-$440,000
2500 sq. ft. $250,000-$500,000
3000 sq. ft. $300,000-$600,000
4000 sq. ft. $400,000-$800,000
5000 sq. ft. $500,000-$1,000,000

New home construction costs: 10 expenses that add up

Now that you’re able to estimate the cost of a new construction based on size, it’s time to familiarize yourself with all the associated expenses that come along with constructing a home. This can help you plan out your housing budget and make sure that you're well-equipped to finance everything you need to build your humble abode.


1. Buying land

To construct a house, you’ll need to have land to build it on. The national average for an acre of farmland comes in at $3,380, but the location and type of land will greatly affect the price.[4] Land in densely populated states, urban areas and housing developments tend to cost much more than the national average and can reach upwards of $150,000 per acre.

2. Preparing the build site

While purchasing your land is one cost, the price to develop it is another. Preparing the land for construction can result in some hefty fees like land clearing ($2,581) and a land survey ($500). The condition of your land can also increase these expenses. For example, a lot with uneven terrain or heavy forestry will be more expensive to clear and grade than flat, treeless land.

Extra land development costs include the following:

  • Conducting a soil test: $1,268
  • Tearing down a pre-existing structure: $4.33 to $11.67 per square foot
  • Adding erosion control (hydroseeding): $0.08 to $0.20 per square foot[5]

3. Determining square footage and the number of stories

Choosing the right amount of space for you and your family to live in is an important decision because you’re investing in what is, hopefully, your forever home. With this in mind, it’s good to be aware that the higher the square footage of your house, the higher the price tag. Additionally, designing and building a house with multiple stories will also increase your total cost.

4. Laying a foundation

On average, it costs about $10,000 to lay a new foundation for the average home; between $5 and $37 per square foot, so this can vary greatly based on your design.[6] It’s worthwhile to invest in a solid foundation, as this will help your home be structurally sound.

5. Picking interior and exterior finishes

The finishes you choose for both the inside and outside of your home can also quickly add up. Interior finishes on average will cost you about ​​$75,259, and exterior finishes excluding roofing average out to around $31,736.

These totals will differ significantly based on your customization and size. Because the cost varies greatly, we’ve listed some major finishes below so you can remember to do your research and get quotes on your finish preferences.

Interior finishes:

  • Cabinetry
  • Countertops
  • Doors
  • Drywall
  • Flooring
  • Fireplace
  • Interior paint
  • Lighting

Exterior finishes:

  • Windows
  • Siding
  • Doors
  • Exterior paint

6. Hiring professionals

If you’re not already an architect, carpenter, framer, electrician and plumber all rolled into one person, it’s best that you hire the pros to help build your house. However, the cost of labor will make up a sizable chunk of your construction bill. Although rates for each professional will vary based on your house, you can expect labor to take up 30% to 60% of your budget. Find some general rates for necessary services below:

  • Architects: Between 5% and 20% of final project cost
  • Framers: $14k tp $32k on average
  • Plumbers: $4,080 on average
  • Electricians: $500 to $2,300 on average[7]

7. Installing a roof

The price tag to quite literally put a roof over your head is about $10,000. You can choose from different roof types such as asphalt, clay, concrete, metal, slate, synthetics and wood. You must pick quality materials, as it’s a vital component of the structure of your home and you’ll want it to last.

8. Choosing appliances

Once your house is constructed, you’ll want to outfit it with appliances that meet your daily needs. Depending on whether you choose the latest in luxury or go with a no-frills approach, your appliance costs will range greatly. For the average family home, the NAHB reports that appliances run about $4,710 on average.[1]

9. Putting in landscaping

Aside from actually building your house, you’ll want to spend on landscaping to finish off the look of your home. Landscaping on average will cost about $8,150 for a typical home, and it can add value to your home by boosting its curb appeal.[8]

10. Accounting for extras

When planning your budget, it’s wise to account for additional costs that may not be listed here. Whether you decide to customize every room in your house or just run into an unexpected problem during construction, you’ll be happy to have a financial cushion built into your budget. If you have money left over when your project is finished, you can choose to save it for the future or spend it on extras that will add value to your home like a wooden deck.

Tips for building a house on a budget

After going over how much a new construction will cost you, it’s important to note that there are ways to save some money. Check out these tips for building on a budget to make sure the house of your dreams isn’t a nightmare for your wallet.


1. Choose a simple design

If you don’t mind living in a box, it’s one of the cheapest home layouts to construct. Whether you choose a perfect square or opt for more of a rectangular shape, you’ll save a pretty penny with a simple design. Choosing to live in a single story and picking modest finishes will also be easier on your bank account.

2. Sacrifice some space

Because the size of your house influences so many construction expenses, you may want to consider sacrificing some square footage to cut costs. Tiny homes are a new housing trend that can help save you money and the environment. If you’re not ready to embrace the tiny trend, think about the amount of space you’ll actually need and use it as a guide to work with your budget.

3. Go for energy-efficient design

Eco-homes aren’t just good for the environment, but they can be good for your wallet too. Many states and local areas offer government rebates and tax breaks for homes with specific energy efficiencies, so check online to see if your area is participating in a program.[9] Many of these programs help with low-risk investments like energy efficiency windows, and they can even help finance bigger projects like solar or wind power for the home.

4. DIY when possible

Home customization is where your costs can really skyrocket. If there are certain “nice-to-have” features that you’d love in your home, doing them yourself will allow you to save money in your budget. Minor cosmetic projects like DIY wainscoting or a faux mantel are great ideas to tackle on your own, but remember that it’s best to leave any tricky plumbing or electrical jobs to the pros.

5. Be your own contractor

This budget-friendly tip is best suited for those with building experience and that have connections to skilled and trusted laborers. If you function as your own contractor, you can save a lot of money by doing work yourself. Even if you proceed as your own contractor, it’s still best to work with professionals when you’re out of your area of expertise.

Professionals like architects and electricians are skilled at what they do and it’s best to let the pros handle things like home plans and electrical wiring. Additionally, hiring skilled professionals will also prevent you from wasting money redoing any mistakes.

6. Save money and the environment with eco-friendly materials

Sustainable building materials can help you save the environment and some green. Look into swapping typical building materials with eco-friendly ones like bamboo, cob, cork, recycled glass, steel rods and stone to help make your dream eco-home a reality.


Wrapping up

Building a house can be a homeowner’s dream come true. However, the costs of new construction can quickly snowball into a financial nightmare. Familiarize yourself with all the different expenses that may come your way and plan your budget accordingly. Use our tips to stay within your budget and don’t forget to admire your hard work when the project is done. After you’ve invested your time and resources into constructing your dream home, make sure to protect it with a home insurance policy so you can enjoy it for years to come.


  1. Cost of constructing a home. NAHB

  2. How much does it cost to build a single-family home?FIXR

  3. Highlights of 2022 Characteristics of New Housing. U.S. Census

  4. Land Values 2021 Summary. USDA

  5. Pricing Guide: How Much Does It Cost to Clear Land? LawnStarter

  6. How much does a foundation cost to build? Bob Vila

  7. Building a house in Texas? Here is what it might cost you. HomeLight

  8. How much does landscaping cost? The Spruce

  9. Energy efficient home improvement tax credit. IRS