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.