Cost of building a house

Cost Of Building A House

On average, building an entirely new house in the US costs around $150 per square footage. Aside from this, you may have to bear some additional expenses as well. The cost of building a house depends on customizations, square footage, and the type of property you choose. It typically demands 9 to 10 months to construct your new home.

How can you budget for building a home? Let’s break down the budget in this guideline.

Factors that Affect the Cost of Building a House

There are many factors that affect the cost of building a house. However, some include:

Construction Site

The building site can heavily impact the cost of building a house. Site conditions, like the presence of pipes, the archaeological site, uneven land, water bodies, environmentally hazardous spaces, and poor soil, can increase home-building costs manifold. Therefore, they all need to be covered when estimating the project budget.

Project Quality

The project quality heavily impacts the construction cost. Whether you want to build your home simple or plan to add modern amenities, the project quality affects the development cost of a living space. Aside from this, high-quality raw materials are required to complete the home-building process without exceeding your budget limit.

Labor Wages

The labor costs comprise a significant portion of total construction project expenses, typically ranging from 20 to 40%. This includes indirect costs, like employee benefits, and direct costs, like wages. In some places, labor costs are charged on an hourly basis, while in others, they are charged regularly. So, it is extremely important to understand the expected labor norms and then estimate the cost accordingly.

Size of the Project

The size of the project also decides the cost of building a house. Large-sized projects demand more materials and more employees. The construction cost enormously differs depending on the project size. So, if you want to build a 1,000 Sq.ft, house, it would cost less in comparison to building the 5,000 square footage of a home.

Building Materials

The quality and type of materials used in the home also influence the overall cost. Using high-end materials, such as custom cabinetry, hardwood flooring, and granite or marble countertops, will unarguably add to the budget. At the same time, opting for affordable yet lasting materials reduces the cost of constructing a house. So, ensure to invest your money in purchasing the right quality and economical material to build your new home.

Here Are Some Tips To Get An Accurate Estimate From A Builder

Look at Previous Projects

The estimating company you are planning to hire must have a good benefits reputation and years of experience in the professional construction estimating industry. If you want to get precise estimates from the builder, it is paramount to check out their previous work. Break down the scope of their past work. It will help you ensure how well they have performed the estimation.

Know Your Labor Costs

Providing your labor is one of the most lucrative parts of the construction project. So, you must be aware of your actual labor costs in construction and how productive your employees are. It will help you precisely determine the cost and time it will take to end the project. 

Here Are Some Tips To Get An Accurate Estimate From A Builder

Compare the Proposals of Subcontractors

When submitting proposals for a given scope of work, subcontractors don’t bid on the same tasks. This indicates that you should dig deep into the subcontractor proposals to determine exactly what each excludes and includes before selecting the lowest one.

Check the Estimating Method

Whether your estimators are using manual or digital methods of cost estimating, it is pivotal to perform accurate takeoffs. The more precise the takeoffs are, the more accurate your budget estimate will be. However, it is best to deploy takeoff software for that purpose.

A Simple Method For Calculating The Cost Per Square Foot

Building a home may seem an easier task. But how do you estimate the cost of building a house? No need to be worried anymore.

You can calculate the cost per square footage by dividing the price by size. However, there is one thing to remember: the cost per square footage is higher for small-sized houses and less for larger ones. Besides, the average price for each square foot of a place is around $125 in the US.

Method For Calculating The Cost Per Square Foot

Additional Costs to Consider

On top of that, some extra costs to consider during construction include the following:

Project Management Costs

Want to know the relationship between cost overrun and project management practices? Effective project management approaches significantly influence building project cost overruns, reducing risks and improving the overall performance of the work. Aside from this, the project management taxes and costs may include temporary staffing, taxes, runners, security and safety staff, staff compensation, and many more.

Construction Fees

The overall budget required for the construction project is calculated by the contractor’s charges for the job. However, these charges may include site overheads, subcontractor rates, labor, materials, profit margin, contingencies, etc. So, you must also consider the additional building construction costs, like the fees for acting as a construction manager.

Price Fluctuations in Labor and Material

Above all, the price fluctuations in labor and materials also affect the cost of building a house. These fluctuations may cause unexpected spikes in building costs, destroy a contractor’s margin, and delay the dates and time to complete the construction work. Some reasons for price fluctuations are demand variation, global economic charges, labor shortages, scarcity, currency market changes, seasonal factors, taxes, and others.


You must also know that change orders, design errors, inaccurate estimates, and poor communication can also affect the cost of building a new home. So, efficient cost optimization is extremely important in building projects. Also, it will help prevent disputes, safety issues, budget overruns, construction delays, and many other issues.

The Final Statement

Building a house can be challenging and time-consuming at the same time. On average, it costs around $150 per square foot to build an entirely new house. However, many critical factors could influence construction costs in some ways, as mentioned above. We hope, by reading this article, you are clear on how to budget your building project and which things to consider to avoid project overruns and other issues.

Frequently Asked Questions

When it comes to building a house, what factors play a role?

Many factors impact the cost of building a house. For example, they may include the home size, the design of a home, local fees and building permits, and landscape costs. Aside from this, the cost of living in space influences the cost of labor, materials, and landscaping estimating in construction.

Which things do I need to consider when determining the labor costs?

The key considerations for estimating labor costs in construction include the project cost, labor hours, market conditions, weather, safety requirements, and the expertise level of workers. By taking into account these factors, you can get precise estimates.

Does the choice of materials affect the overall cost of construction?

Material costs can significantly impact the overall cost of the building project. Materials with lower maintenance costs may be more expensive. However, some factors influencing the selection of construction materials comprise handling and storage, list of materials, strength, skills required, sustainability, local availability, and many others.

To obtain an accurate estimate from a builder, what should I do?

You can get the most reliable and accurate budget estimates from a builder by reviewing past costs and estimates from similar projects. Aside from this, it is also best to identify previous flawed assumptions, unaccounted costs, and over-budget items.

Which things do I need to consider when determining the labor costs?

The key considerations for estimating labor costs in construction include the project cost, labor costs, market conditions, weather, safety requirements, and the expertise level of workers. By taking into account these factors, you can get precise estimates.

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What Is The Most Expensive Part Of Building A House?

Expensive part of a building a House

Building a custom home is always a great choice. It gives you a flex of customization and enables you to make changes in your way without having to compromise. However, making a custom home is a complex, long, and challenging task. It might be a cost-effective and wise solution but requires a lot of fuss. Cost in residential estimating is one of them, it requires a lot of complex costing structures. For your ease, we’ve written a brief guide on the most expensive part of building a house.

Average Costs of Components In-House Construction

Well, if we go in-depth, there’s no one answer to that question. It’s not a competition where there will be only one winner. Instead, the answer to the most expensive part of the cost of building a home. For a rough estimate, here’s the table:

Cost ComponentPercentage of Total Cost
Site work and foundation15-20%
Framing and trusses15-20%
Windows and doors5-10%
Plumbing, electrical, and HVAC systems15-20%

Some things influence the answer e.g., the market, the type of material, and the house you want to build. However, on average, here are some of the most expensive parts that costs a lot when building a house:

Frame of the House

There’s no wonder that the frame of the house is one of the most expensive parts of any building house. It’s the base, most important, and most expensive part of the house. The reason why it’s so expensive is the materials, time, and workforce required to complete the frame are complex.  The frame of the house requires a lot of woodwork and not just regular wood. The frame of the house requires timber wood which is one of the most expensive wood types used in the building of a house. 

Moreover, it also requires a complex structure, and hence more use of labor. The labor you choose must be skillful enough to complete the work properly without creating any mess or mistake. In the end, skilled and expert labor is always expensive.

Frame of the House

Roof of the House

It depends on what type of roof you choose. If you’re using concrete concrete estimation service for roofing, then roofing will be much higher as compared to wooden roofing. Wooden is still expensive in a few cases. That all depends on the type of roof you want.  If your choice is the tiled roof, it’ll be much more expensive to roof the house. The tiles, plaster to install them and the labor isn’t so cheap in the roofing. You must choose a workforce that is professional and expert in plastering and roofing. In the end, the expert workforce is always expensive. 

The concrete roofing is on the same page. The concrete, TMT bars, labor, plastering skilled workforce, and concrete-assisted machines are the most expensive components when roofing your house. The result you get is one of the most expensive roofing materials. 

Foundation of the House

The foundation must be sturdy and strong enough to support the weight of the house. The foundation also acts as a membrane between the ground and the house itself.  Its purpose is to protect your home from water damage and keep it safe from earthquakes, fires, or other hazards. If you want your home to be safe from any disaster then you need to have a good foundation that can withstand any kind of pressure or weight on it.

The foundation is made up of sub-flooring and footings. A sub-flooring is an area that lies below the floor above and it provides support for the joists, rafters, and beams on which you can build your home.  The foundation consists of pieces of concrete or masonry that support a building at its base. All these things make the foundation of the house expensive in residential estimating.

Interior and Exterior Finishing

Interior and exterior finishing is part of the construction that consists of painting and designing the house to make it look beautiful and liveable. Of course, you don’t want to live in a house with naked concrete plaster and wood blocks. The interior and exterior finishing has no practical use on the structure or design of the building. It just influences the way your house looks. 

Finishing the house involves various structures including the paint of the house, decoration pieces, pearls in the paint, plants, flowers, artificial grass, furniture, and all the other miscellaneous items that increase the look of the house. 

The major reason why they aren’t cheap is their processed form. Unlike raw materials used in the building of the house, furnishing items aren’t raw. They are designed with precision, time, and mind. That’s the reason why they are so expensive. Here are some of the most common finishing items used in the housing industry:

  • Painting of the house
  • Weatherproofing shield
  • Furniture
  • Decoration items
  • Shelves
  • Images
  • Painting

There are other various things based on the owner’s creativity and needs that influence the cost of building a house.

HVAC in the Building

HVAC refers to Heating, Ventilation, and Air Conditioning systems. It refers to the management of air conditioning inside your building or house. It is similar to an air conditioner but at a relatively bigger scale. The components of the HVAC are always expensive. Not just the components, the installation of the HVAC estimating service is highly complex and requires a lot of effort. So:

More effort the labor ∝ More money they’ll charge.

The components of the HVAC include:

  • A large-scale fan and radiator
  • AC unit
  • A large-scale industrial compressor
  • Aluminum pipes 
  • Ducts

All these components aren’t cheap.

That’s just one side of the HVAC budget. The installation cost also influences the HVAC system to a significant %. The main purpose of the HVAC is to evenly control the air of the whole building and no space is left behind. You can call this system a central air conditioning system.  Regrettably, the HVAC’s air doesn’t travel wirelessly. Therefore, you need a piping system to travel the HVAC’s air to every corner of the building. This task requires a skilled and expert workforce. 

The labor will design rooftop ducts that spread out to the whole building for air ventilation. Not just that, they might need to make cuts between the walls and windows to make sure that the HVAC’s air is equally ventilated all over the building.

Plumbing of the House

Plumbing is expensive when building a house because it is not just one product but an entire building system. The whole home needs to be designed and built as per the plumbing system. The plumbing system in a house can vary depending on what type of home you are building, how many bathrooms and sinks you plan on having, and the size of your family. Plumbing includes all the fixtures in your home that connect to pipes such as faucets, toilets, showers, sinks, and tubs.

A plumber must install the main pipes and fittings at the beginning of construction. He also needs to make sure that the plumbing system is safe and reliable for everyone who will live in this house.

The plumber may need to add extra pipes or fittings to accommodate new appliances or fixtures that are added later in the process. The plumber might also need to change the layout of some parts of your home, such as where certain pieces of equipment are located on a wall or how they connect to other pieces of equipment.

Plumbing of the House

How to Source the building material in the lowest amount possible?

The sourcing at the lowest possible pricing is always based on skills and market knowledge. You can buy the same material at a higher price than average and the same material at a lower price than in the market. It all depends on your market knowledge and the type of sellers from which you’re sourcing. 

Always Buy From Wholesaler

The wholesaler will always give you better pricing than a retailer. The reason is simple economics. The wholesaler works at a bulk quantity while the retailer works on each product-based business. This makes the wholesaler a better deal.

However, note that wholesalers can only give you the pricing quotation 10%-12% cheaper than the retailers. So it’s only good if the wholesaler is near your area. Additionally, there are shipping charges and other costs that you have to sponsor in the wholesale retail. So it might not be a good idea to go to a wholesaler if you need a few building materials.


What are the main cost components of building a house?

The main cost components of residential estimating include the cost of land, construction materials, labor, permits and fees, design and engineering fees, and financing costs.

What is the most expensive part of building a house?

The most expensive part of building a house is the foundation. The cost for this part of your house is around $20 per square foot 

How long does it take to build a house?

The time it takes to build a house depends on several factors such as the complexity of the design, the size of the house, and weather conditions.

How can I save money when building a house?

You can save money when building a house by choosing a simple design, using cost-effective materials, and reducing the overall square footage of the house.

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