How Much Does It Cost to Build a Custom Home?

Blueprints and a calculator

Custom homes allow homebuyers to build the perfect home of their dreams. You can build a home to your exact criteria, whether that be a home with a large backyard and pool, or a unique floorplan to fit your family’s needs. However, it is important to know that straying away from a high volume homebuilder, or production builder, means you will be paying more out of pocket.

Yet, the benefits of building your dream custom home may outweigh the cost. For example, buying a new home will benefit you in the end, as opposed to an older, used home. Many people associate custom homes with large, expensive and elaborate homes, when that’s simply not the case. A custom home can look any way you want to, small or large!

How Much Does It Cost to Build a Custom Home?

The exact cost of your new custom home will depend on the location and size of the home. According to the U.S. Census Bureau, a survey of the median price per square foot of new single-family custom homes in 2017 showed the average cost was $120.03 per square foot. Alternatively, a new single-family home by a production builder costs on average $111.05 per square foot.

HomeAdvisor estimates a custom home can cost anywhere between $350,000 to over $1 million. Of course, it all depends on the size and location of your home, the amount of customizations you choose to add, and how long it will take to build.

We have more information on the costs associated with building a house here.

New contractor-built (custom) single-family homes sold in 2017
Region Average Cost Per Square Foot Median Cost Per Square Foot
U.S. (all regions) $120.03 $107.39
Northeast $158.72 $161.53
Midwest $121.04 $116.37
South $100.91 $92.56
West $167.24 $120.03
Source: U.S. Census Bureau Survey of the Median Price per Square Foot of new single-family homes, 2017

Is it cheaper to buy land and build a house on it?

There are many factors to consider when budgeting for a new custom built home, including:

  • Buying your own lot: Many estimates do not include the cost of the land you’re building on. The National Association of Home Builders reports an average of $85,139 for the land. This includes the costs associated with financing it. This cost will be higher if you choose land that needs to be leveled.
  • Building materials: This includes foundation, framing, exterior and interior finishes, roof, and any other customizations you plan to add to your home.
  • Labor costs: Hiring architects, engineers and surveyors
  • Machine costs: This will be based on what equipment your hired professional has to rent. The size and location of your custom home will affect the cost of machinery as well. For example, if you are building in rocky or unleveled environments, special machinery may be required.

Breakdown of Costs Associated with Building A Custom Home

The cost of labor will depend on how much time and energy they need to put into your home. Large, custom-built homes will have a much higher labor cost than smaller, production homes. Factor in the following:

  • Architects: According to HomeAdvisor, architects can cost anywhere from $60 to $125 an hour. For a 2,500 square foot house, and hiring an architect at $60 an hour, the design fees can run at about $4,000.
  • Engineers: Expect to pay around $100 to $150 for their expertise.
  • Land Surveyor: Fees can range anywhere from $200 to $800 depending on your lot size, location, and the age of the lot

Like any project, it’s always a good idea to get estimates from multiple experts in the area before hiring a professional. Our step-by-step guide to the home building process will tell you how these professionals will come into play towards building your dream home.

Custom Home Building Step Average Cost What does this include?
Site Work $15,903 Building permit fees, impact fee, water and sewer inspection fees, the hiring or architects and engineers, and other associated costs
Foundation $25,671 Excavation of the lot, pouring of foundation and concrete. If needed, your home may need retaining walls, and that will add to this overall cost
Framing $41,123 Roof framing, trusses and sheathing
Exterior Finishes $33,066 Exterior wall finishes, roofing, windows and doors
Major Systems $32,746 Plumbing, electrical and HVAC systems will be most of your costs, primarily for installation. If you plan to install energy efficient systems, such as solar panels, expect to pay more out of pocket. However, with energy efficient systems, your bills will be much lower on average, and will ultimately save you money in the end.
Interior Finishes $67,939 The majority of what goes inside your new home including insulation, drywall, interior trims, doors, mirrors, painting, lighting, countertops, flooring, and appliances
Final Details $16,591 This cost can greatly vary depending on how many details you plan to add onto your custom home. Generally, this cost will include landscaping, outdoor structures such as the deck, patio, and any balconies, the driveway, and any clean up the crew needs to do.
Source: National Association of Home Builders, 2017

 

Make sure to establish a realistic budget with your builder and stick to it. Don’t be enticed by nicer looking designs to add to your home if it puts you way out of your budget. Most homebuyers know that additional customizations will increase the cost of your custom home, but unexpected costs can take you by surprise, so make sure to do your homework.

For additional information on custom home builders versus production builders, check out this article on NewHomeSource.

Shannon Wilson is a Digital Content Associate for Builders Digital Experience (BDX). Her main role is to create video content, write and edit articles for NewHomeSource.com and HomLuv.com. Shannon graduated from Texas Tech University in May 2014 with a bachelor’s degree in Electronic Media and Communications. 

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