The latest Construction Cost survey by the National Association of Home Builders (NAHB) found that the average cost per square foot to build a home came out to $85.65.
The survey found that on average 55.6 percent of the final sales price of a new home goes to construction costs, 21.5 percent to finished lot expenses and 22.9 percent to financing and business costs. In this survey, construction cost totaled $237,760 for an average 2,776 sq. ft. home.
The design of a home, such as its size and shape, obviously influences construction costs, according to Ed Hudson, director of Market Research for the Home Innovation Research Labs, an NAHB subsidiary. Larger homes with a basement, more floors, more corners, unusual shapes and more complex rooflines naturally cost more per square foot than an average home.
“However,” notes Hudson, “the cost per square foot for a new home is even more greatly impacted by the construction quality, grade of exterior materials and level of interior finishing of the home.”
This involves the quality of cabinetry, countertop material, appliances, plumbing fixtures and finishes, lighting, flooring, and HVAC systems, as well as the level of molding and trim, the grade of siding and roofing products, the number and efficiency of the windows and doors and the extent of energy efficient systems and home automation features included. These “finishes” could easily add anywhere from $30 per square foot to $80-plus per square foot to construction costs.
For potential buyers, Raymond Pruban, chief manager of Amaris Custom Homes in Maplewood, Minn., offers this analogy: “When people ask how much per square foot, I ask what do you want: a Mercedes or a Chevette? Both are cars, both have steering wheels and both have four tires, but one may be $4,000 per tire and the other $25,000 per tire.”
When comparing square foot costs of different homes and homes in different regions, you need to make sure you’re comparing apples to apples. — Ed HudsonRegional Variation in Construction Costs
New-home sales price and construction costs also vary greatly across the country, adds Hudson. The latest Census Bureau Survey of the Median Price per Square Foot of new single-family homes shows the sale price per square foot in 2017 ranged from $148.45 in the Northeast and $126.43 in the West region to $95.35 in the South and $104.15 in the Midwest.
“The biggest cost variations from region to region have to do with the price of land, the cost of labor and the cost of materials,” says Hudson. “The most volatile ingredient is the cost of land. Building in seismic and high winds areas will add to the cost of construction. As can requirements to build taller homes or homes with breakaway lower-level walls in flood plain areas. Local impact fees and permitting fees vary substantially.”
Pruban agrees. Variations in local land use, regulations and labor conditions dramatically affect regional home construction costs.
In Maplewood, Minn., “the Metropolitan Council, using local city comprehensive plans, directs development,” Pruban says. “This can have the effect of driving up land prices because, as soon as an area of use is opened, developers usually scramble to it and bid up the price.
Cost Per Square Foot of New Single Family Homes in 2017
New Single Family Homes Sold in 2017
| Region | Average Cost Per Square Foot | Median Cost Per Square Foot |
| All US Regions | $111.05 | $101.25 |
| Northeast | $161.53 | $148.15 |
| Midwest | $106.79 | $104.15 |
| South | $100.01 | $95.35 |
| West | $139.48 | $126.42 |
Source: U.S. Census Bureau Survey of the Median Price per Square Foot of new single-family homes, 2017.
New Contractor Built (Custom) Single-Family Homes Sold in 2017
| Region | Average Cost Per Square Foot | Median Cost Per Square Foot |
| All US 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.
Northeast region: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont, New Jersey, New York, Pennsylvania
Midwest region: Illinois, Indiana, Michigan, Ohio, Wisconsin, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota
South region: Delaware, D.C., Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia, Alabama, Kentucky, Mississippi, Tennessee, Arkansas, Louisiana, Oklahoma, Texas
West region: Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, Wyoming, Alaska, California, Hawaii, Oregon, Washington
Material Costs Drive the Price of New Homes
The cost of materials also varies significantly from region to region.
“Lumber will be a bit lower in lumber-producing areas. Local building practices make some lower cost materials accepted and some not. Asphalt roofing, for example, is common in many areas of the country. In other areas, the standard is concrete roofing tiles, which are more expensive,” Hudson says. “Several major building materials — such as steel, cement and lumber — are subject to commodity pricing, which can fluctuate with world-wide demand.”
Even the cost of shipping and warehousing materials, he adds, varies depending on the geographic area, being more expensive in more densely populated areas than in less densely populated areas.
Finally, when comparing square foot costs of different homes and homes in different regions, you need to make sure you’re comparing apples to apples, says Hudson.
Roy Diez is a freelance writer and marketing professional specializing in the architectural, building and construction industry. He is a former editor-in-chief of Professional Builder magazine.
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