If you’ve searched the market and determined there’s no existing home that meets your needs, you may start to wonder: How much does it cost to build a house? It’s a reasonable question considering price is among the most important factors in any real estate investment decision. “There’s historically been a high preference for new homes, and that was the default choice, because existing inventory just wasn’t there,” says Alec Hartman, founder and CEO of homebuilding company Welcome Homes. As more homes became available, it became more common to purchase an existing property. However, this trend may be changing. According to the National Association of Home Builders, the sale of newly built homes is on the rise as of May 2023. Still, the home building process can be a daunting task, though with proper research and planning, owning your dream home is a possibility. In this guide from AD, we break down everything you need to know about home building costs.
Cost to build a house by square footage
According to HomeAdvisor, a network and marketplace made up of construction professionals, the national average range to build a home in the United States is currently between $138,937 and $531,294. “That number is based on the average home being 1,500 to 2,200 square feet,” Manny Angelo Varas, founder and CEO of Miami-based homebuilding firm MV Group USA.
Generally, many home builders look at the price of a home not on the total cost, but on the cost per square foot. This can help contextualize the wide range of potential prices. “You’re almost always looking at triple-digit prices per square foot,” Hartman says. “I haven’t really seen less than that.”
Varas considers prices based on two phases. “Phase one is effectively your structure,” he explains. “This includes mechanical, electrical plumbing, impact windows, roofing, framing, and drywall. So that is your required cost in order to get into what you would consider a white vanilla box.” Generally, he says most homes cost on average around $150 to $200 per square foot. From there, he recommends considering costs for phase two, which includes all finishes such as flooring, cabinetry, landscaping, plumbing fixtures, or lighting. “Say I have a 2,000-square-foot area that needs tile that costs $2 a square foot, that’s $4,000. Then you take that and add it to phase one costs to understand your total price per square foot with the additional costs for those finishes,” he says.
When thinking about both phases together, Hartman proposes the following numbers as averages to consider. For a starter home without many bells and whistles, an average price per square foot could be in the low hundreds, though a more realistic estimate would be somewhere between $200 and $250 per square foot. For mid-market homes, homebuyers should expect to pay between $300 and $400 per square foot, and anything that’s more than $400 per square foot would be considered an upper-market, luxury property. With these numbers, consider the following averages.
Cost to build a house by state
The average cost of a custom home can also vary widely between states. “It will always be different in different areas,” Hartman says. “The cost of labor changes, what the county or state requires is different, the supply chain is different, there’s different insulation requirements. It varies quite a lot.”
The price of land in varying states is among the most determining cost factors in 2025, says Steven Webb, director of legislative affairs at the North Carolina Home Builders Association. While permitting and zoning fees do play a role, they are minimal compared to the significant land cost disparity between urban centers and rural farmland. “[Government fees] may be anywhere from a few hundred to a couple thousand dollars, he explains. “I saw an acre of land for over $400,000 in Raleigh. It’s all land cost right now.”
To determine the most and least expensive states to build a 2,100-square-foot house, we used insights from Home-Cost, a cost estimation software for homebuilders that uses data from sources such as the National Association of Home Builders, the US Census Bureau, and its own database. Note that these are averages (cost in different zip codes by state will vary greatly) and take into account general contractor fees, though they exclude development costs like excavation, material quality, and design complexity.
The most expensive states to build a house
Alaska
$294 per square foot
$616,749 overall
Several major factors contribute to Alaska’s steep building costs. Many rural communities are difficult to access, which drives up transportation and shipping costs for building materials. Skilled labor is also in short supply, further inflating labor expenses. “Labor moves to where the market is hottest,” said Webb. “So a lot of the skilled labor, whether it’s the framers or the electricians, the HVHC, all those folks, they’re going to stay in the areas where they can stay busy and that’s in the high-growth urban settings.”
Additionally, the state’s long and harsh winters limit the construction season, reducing the number of homes that can be built annually.
California
$291 per square foot
$611,205 overall
While California doesn’t face Alaska’s winter challenges, its high cost of living significantly impacts labor and material expenses. Builders also contend with restrictive zoning laws and strict building standards, which add to construction costs.
Hawaii
$287 per square foot
$603,561 overall
As an island chain, Hawaii faces high land costs and expensive material transportation from the mainland. Homes must also be built to withstand hurricanes, heavy rains, and humidity, requiring specialized materials and design. Like Alaska and California, Hawaii’s complex zoning regulations and permitting process also drive up costs.
Massachusetts
$285 per square foot
$597,450 overall
According to Zippia, land in Massachusetts averages a staggering $333,200 per acre, which adds to already high construction costs. Rising labor and material costs and ongoing supply chain issues further plague the cost of building a home in the state.
Connecticut
$281 per square foot
$589,722 overall
Connecticut also grapples with high land prices and a shortage of skilled labor, which inflates construction costs. According to Prime Homes, a Hartford-based home builder, 80% of construction firms face difficulty finding skilled workers, leading to project delays and additional costs. In fact, Connecticut construction costs are 8% higher than the US average, with cities like Bristol and Stamford seeing a 12% premium.
The cheapest states to build a house
South Carolina
$150 per square foot
$315,651 overall
South Carolina’s mild climate might help reduce the cost of building materials compared to homes in colder regions. The temperate weather eliminates the need for expensive insulation, heating systems, and other winter-proofing measures typical of northern builds.
West Virginia
$143 per square foot
$300,573 overall
West Virginians benefit from a relatively low cost of living, which helps keep material and labor costs down. According to World Population Review, West Virginia’s 2024 cost of living index was 90.3. For comparison, the range is 85.3 to 179, with Mississippi at the lowest and Hawaii at the highest.
Maryland
$139 per square foot
$292,740 overall
Maryland’s diverse geography means construction costs can vary greatly depending on location. Urban areas like Baltimore tend to have higher costs, while rural land is much more affordable. Labor costs fluctuate based on accessibility and demand for skilled workers.
Georgia
$134 per square foot
$282,114 overall
Georgians enjoy a particularly smooth supply chain, lowering material costs. Due to its southeast location, it benefits from proximity to manufacturing hubs, which can reduce transportation fees, too.
Florida
$130 per square foot
$272,202 overall
While coastal properties and luxury homes in cities like Miami can be pricey, building costs in Florida are generally lower in rural areas. The cost of construction depends on location and the quality of materials used, making it possible to build affordably outside major cities.
Cost to build a house by region
Like with states, a new home builder may also want to consider the region in which they’re planning to put down roots. According to Money it can be more cost-effective to build a home in the West and South Atlantic, where prices in the existing housing market are high. In regions such as the Midwest where prices are generally lower, it’s often more cost-effective to buy something that already exists.
“Coastal areas can also be much more expensive,” Varas adds. “The price varies more there because you have items like pilings and different impact windows and other items that ended up increasing costs.”
Factors that impact the cost of building a house
As noted, the price range when it comes to building a new home can be expansive. “It’s extremely variable,” Hartman agrees, explaining that build time, framing, location, and site preparation all play a role in the overall cost for new home construction. Though every project is unique, consider the following common circumstances that contribute to the total cost of a home.
Land and site preparation costs
Depending on where you plan to build, the land cost—in addition to the cost associated with its preparation and excavation—can vary. “Every parcel is gonna have a different land price,” Hartman says. “Every excavation is going to have a different price because of the slope, because of where water is on the property, because of many different things.” This is also the part that tends to be the most unknown and at risk for ballooning costs. “The most uncertain, variable cost is site prep,” Hartman explains, making proper planning that much more important.
Permitting Costs
Building permit fees are among the lesser costs when it comes to building a new home; however, they should still be considered. Generally, the price of permits ranges from $50–$300 for smaller jobs such as plumbing or small upgrades, and goes up to $2,000 for major remodels and new construction, according to HomeGuide, a marketplace that connects homeowners and construction and maintenance professionals. Other permit costs include electrical permits, plumbing permits, and HVAC permits. The price of a permit generally varies by city or municipality.
Material Costs
Both the quality and quantity of building materials will impact how much it costs to build a home. Assuming every other factor is the same, a bigger home with high-end materials will almost always cost more than one with a smaller floor plan and more humble finishes. When considering material costs, it’s important to consider both exterior finishes and interior finishes as well as installation costs should any item require specifically trained professionals.
Labor Costs
A lot of skilled professionals are needed when building a house from scratch. In addition to a general contractor, most projects will also include numerous subcontractors to perform specific tasks such as installing major systems like plumbing fixtures, HVAC system, and electrical wiring; finishing drywall; applying roofing and shingles; adding countertops and cabinetry; and even landscaping the new site.
Location and region
As previously explained, the location and region of a build can impact the total cost of construction. Land plots in desirable areas typically cost more in addition to costs associated with city or state building codes or permits. Sites that require more prep work or additional requirements, like in a coastal area, can also contribute to the end number.
Other frequently asked questions
Building a home can be confusing for a first time home builder. Here, Hartman and Varas answer frequently asked questions surrounding home construction.
What steps do you take to build a new house?
According to Hartman, there are two options when it comes to building a home. “From a high level, there are two ways to go,” he says. “Way one is you buy land and you build a house to that property.” In cases like these, homeowners may opt hire an architect to design a property to fit their tastes and needs (for AD-vetted professionals, consider the AD PRO Directory). The other possibility is to choose a house from a plan set, and then find a property that would fit that house. With each option, the chronology of individual steps in the process changes. “If you’re fitting land to a house, that means you’re changing the site planning, versus if you have a site that you’re then fitting a house to, the architecture comes second,” Hartman explains. No matter which option a homeowner takes, following this initial decision, they’d begin buying land, submitting permits, excavating the site and laying the foundation, followed by rough construction (which covers steps like framing, electrical wiring, and plumbing systems) and finished construction (which generally encompasses interior finishes).
How do you pay for a custom house?
If you’re planning on purchasing a new home, you may wonder how to pay for the project. Do you need a construction loan? Then a mortgage? Do you need a certain amount saved? While paying for an existing property is usually managed through a down payment and a mortgage from a bank, it’s logical to wonder if the same is true for new builds.
“It doesn’t have to be all that dissimilar from a traditional home purchase,” Hartman says. “Most banks carry a construction to permanent mortgage, which is a standard bank product that allows you to buy the land and commission construction all in one single close.” Like a standard mortgage, homeowners typically put down a down payment, sometimes as little as 10% and make some interest payments during construction to the lender. “As soon as you move in, it automatically turns into a standard mortgage, which is pretty competitive,” Hartman adds.
Is it cheaper to buy a house or build it?
Hartman says there’s an adage among homebuilders and owners that building a new home takes twice as long and costs twice as much, however, this doesn’t necessarily have to be the case. Depending on what a homeowner is looking for, either option could be cheaper. The answer often changes by state and region, where some areas have a traditionally lower-cost housing market, meaning it may be more cost-effective to simply buy something that already exists. Likewise, some areas have extremely high home prices and it may become more affordable to build something new.
It’s also true that the answer can change depending on the economic state of the world. For example, in 2021, the cost to build a new home increased by 15% year or year, Quartz reported. Home costs increased largely due to the cost of raw materials, which had gone up because of dwindling supply thanks to wildfires and beetle infestations as well as pandemic-related supply chain issues.
However, Varas cautions people to also consider the cost difference at a square foot level. “A lot of people get lost with just the total price of the house, and they’re not looking at the actual square footage and what they’re actually obtaining,” he says. “Let’s say you see a 2,500-square-foot house selling for $750,000, you’re looking at a $300-per-square-foot price point.” By understanding the average cost per square foot in a market, you can calculate the potential gains that can be created by building instead of owning. “If you can get your construction costs to $150 a square foot and the sale price is $300 per square foot, you’re effectively gaining $150 per square foot of additional area,” he explains.
What is the most expensive part of building a house?
In terms of the entire home building process, Hartman says the most expensive part is construction. However, this price is generally calculated from the beginning with little risk of changing throughout the building process. “The most variable cost is site prep,” he says. This is where most of the hidden costs can lie, as each site extremely different from the next.
What are the disadvantages of building a house?
Both Hartman and Varas agree that the time it takes to build a house is among the biggest disadvantages for custom home owners. “That’s sort of the biggest disadvantage,” Hartman says. “Building shouldn’t happen overnight, because that means that it was way too fast and the quality isn’t there. So it’s a slower process.”
With this, Varas adds that it can also be difficult to either own two properties at a time or be in need of a shorter-term rental option such as an Airbnb. “People have to pay for both for their existing home and the new property that they’re building,” he explains.
How can you save money when building a house?
There are different ways to save money while building a house. Among the more simple steps, building a smaller house or using mid-market materials instead of luxury finishes will shave off some dollars from the bottom line. “The major contributions to cost are soft cost and intangibles,” Hartman says. “Where people get scared is wondering what could go over budget.” He says these costs often creep up most commonly during site preparation, so choosing less “risky” land such as an area with an existing water supply or a flat plane can minimize ballooning costs.
Other ways to manage costs include opting for modest kitchens and bathrooms, using drywall on the interior, choosing a stock design, and installing a simple roofing system, according to the National Association of Home Builders. Still, with a custom home comes many more options, making each person’s dream home a little more possible. “It is a function of planning,” Hartman says. “I think the biggest financial black hole is in lack of preparedness.”
Katherine McLaughlin and Mike Miller, Architectural Digest