How Much Does It Cost to Build a House in 2021?

As building material costs rise, homebuyers are wondering what to do: Build new, or purchase an existing home? The decision often comes down to finances.

The median price for a pre-owned home in May 2021 was $356,600, according to a news release from the National Association of Realtors; the Census Bureau reported the median sales prices of new homes for the same period was $374,400. So where does that extra $20,000 or so come from in new builds? Here’s a breakdown.

Cost per Square Foot of a New Single-Family Home

Source: U.S. Census Bureau

These averages can give you a rough estimate in devising a budget, but the final tally will fluctuate according to these factors:

• Regional labor costs
• Cost of the land
• Building materials – standard or top of the line
• Square foot size of your home

Cost per Square Foot to Build a Custom Home

In comparison, the price for building a custom home can be as high as $550 per square foot, depending on what you want. Upgraded interior finishing can easily tip the scales toward the million-dollar mark overall.

Percentage Breakdowns

Different aspects of building a custom home are going to cut more into the overall budget. Here’s a loose outline from HomeGuide that shows how much of the budget different factors can cost:

Those with expensive tastes will quickly notice how the interior finishing percentages can swell, carving out a larger slice of total costs. As you design your new home, review the costs of adding molding, granite countertops, high-end faucets, and top-of-the-line appliances with your builder—before you buy.

A more cost-effective route is to purchase a home the builder has already designed. These do allow some flexibility to ensure the home fits your needs, and even if you toss in a few upgrades, the grand total won’t rise through the stratosphere.

Should You Hire an Architect for a Custom Home?

There is no hard and fast rule that states you must retain an architect to design your custom-build home, and they can add a significant expense to the overall budget (fees range from $60 to $125 per hour). For a cost-friendlier option, you can purchase a custom home plan pre-designed, and then have an architect weigh in to ensure it meets local building codes.

Be Sure to Plan Ahead

Whether you’re going with a production home or a custom home, 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 budget; having a plan ahead of time will save you a lot of money and stress.

Kathy Pierce

Kathy Pierce is a freelance writer and editor based in Houston who has amassed an extensive portfolio. Her articles have been published in Woman’s Day, Forbes, Huffington Post, Yahoo Finance, Guideposts, and many other national Christian magazines. Further, she has written content for the University of Notre Dame and edited a Wall Street Journal bestseller. Kathy is also a contract writer for Deloitte. When she’s not writing or editing, she enjoys spending time with her biological family and her church family.