How Much Does It Cost to Build a Single-Family Home?

Reviewed by Carol J Alexander remodeling expert. Written by Fixr.com.

Not finding your dream home in the real estate listings? Do existing home prices have you down? Building a new home may be the answer. If building a new house interests you, but you're unsure if you can afford the cost of new home construction, we're here to help.

This article will examine the average cost ranges to build a 2,500-square-foot home with no basement, two bathrooms, and central heat and air. We'll discuss the construction costs and other factors that affect those costs. However, any estimates here do not include the cost of land.

The average cost to build a single-family home

Factors that contribute to the cost of building a single-family home

From small to large and economical to luxurious, the total cost to build a single-family home depends on many factors. To help you plan your home-building budget, we'll examine the building process and the significant factors influencing the project cost.

Location

Every aspect of home building varies from one part of the country to the next. You'll find higher prices in urban areas over rural areas, from land and labor to the cost of materials. Coastal regions tend to have higher costs than the Midwest. The following chart illustrates how the average price to build an average-sized 2,500-square-foot home varies by state.

Average cost to build a 2,500-square-foot home by state

Lot selection

Before you drive a single nail, the costs to build a home start adding up. First, you have the land purchase. Land prices vary by size, location, and real estate market trends. For instance, you may purchase one acre of land for $40,000, but if you buy a 100-acre farm, the per-acre cost could be reduced to around $10,000 because the property is sold as farmland, not individual building lots.

This all depends on where you live, though. If you’re buying a typical ⅛-acre lot in the suburbs, it could cost $40,000, making the per-acre cost $320,000.

If this sounds confusing to you, don’t worry. A qualified real estate agent can explain the nuances in your region of the country.

Plans and permits

Before any work can commence, start with a plan and secure any necessary building permits. The local building officials will want to see blueprints and plans with an architect's or engineer's seal of approval. The minimum you can expect to pay for these professional services is between $1,692 to $3,603.

The building official will ensure the plans adhere to current building codes before approval. Once they approve the plan, you’ll need to purchase permits for the work. The cost of permits varies wildly around the country. They also differ from one county or city to the next within the same state. However, they are typically based on the total cost of construction. Expect to pay from $3,493 to $6,354 for construction permits, depending on where you live and whether or not your area charges environmental impact fees that can reach thousands of dollars.

Home size

The average cost to build a home by square footage is $203.

As a general rule of thumb, some contractors like to give a square footage cost to build a custom home. While this is a great jumping-off point, the overall cost will depend on building material costs, upgrades, the floor plan, and other things you include. So, don't get disappointed if the estimate for your new home comes out more. 

The average cost to build a home by square footage

The number of stories

Because the foundation and roof are smaller, the price of a two-story home is slightly lower than that of a one-story house. This decrease is due primarily to a smaller site excavation and less roofing materials. For a 2,500-square-foot, two-story home with no basement, expect to pay $340,806 to $620,077, depending on location and materials.

Site work

With the plot of land purchased, plans and designs created, and permits secured, it’s finally time to start digging. Things like water, sewer, and electricity are added expenses. In rural areas, this entails well-drilling and septic tank installation. In municipal areas, there’s a cost to tie into the city or town’s systems. And, of course, you’ll need to pay to run electricity from the nearest line no matter where you live.

The average cost to install a septic system for a three-bedroom home runs from $8,986 to $16,350, depending on your location.

To drill a well, expect to pay from $2,500 to $25,000, depending on your location and the well’s depth.

Finally, excavating creates a level spot for the house. Heavy equipment operators move dirt to make space for the footers, foundation, and utility trenches. On average, the site work for a 2,500-square-foot home runs about $4,511. And digging necessary trenches is $11.97 to $21.77 per linear foot, depending on your location and the trench depth. Overall, excavation costs could run from $7,235 to $13,164.

Foundation

The foundation of the home affects the cost depending on the type. For example, a crawl space would cost less than a full basement due to less labor and materials. For a 2,500-square-foot home, expect to pay around $24,009 for a full basement.

Framing

With the foundation in place, the builders begin constructing the walls. Typically, homes are wood-framed with 2x4 and 2x6 studs covered with plywood sheathing on the outside and drywall on the inside. Lumber prices are known to fluctuate. But since the pandemic, those fluctuations have been quite wild. According to the National Association of Home Builders (NAHB), lumber prices added $14,000 to the cost of a new house in the years immediately following. And currently, the cost to frame a 2,500-square-foot home is between $72,953 and $132,733.

Mechanicals

After completing the foundation, walls, and roof, the builders install plumbing, HVAC, and electricity. For the most part, these expenses are pretty standard. But the plumbing expense will increase if you include amenities like a Jacuzzi-style tub in your primary bathroom, an extra bathroom, or on-demand water heaters on each floor.

Likewise, installing extras like electric vehicle chargers, solar panels, or a whole-house generator will increase the electrical costs. And, of course, the energy efficiency of your HVAC system will dictate its cost.

Depending on your location, the hourly rates of subcontractors who install the major systems of your new home include:

• Electricians – $101 to $183 
• Plumbers – $101 to $183 
• HVAC mechanics – $86 to $157

Other contributing factors

Finally, the quality of materials influences the cost of building your new home. For example, when you replace luxury vinyl flooring with marble, you jump from the budget-friendly category to the luxury build category. Therefore, you'll find cost differences when choosing materials for the following areas.

These costs are for materials only. When installing luxury materials, you may incur higher labor costs because those materials require particular skills that not all subcontractors have.

• Roofing – The cost of composition shingles ranges from $1.20 to $2.19 per square foot. But a standing seam metal roof costs $14.75 to $42 per square foot. 
• Exterior finishing – From vinyl to composite board to brick, how you finish the exterior of your home. Here are a few costs for exterior finishes by the square foot.
• Vinyl siding – $5 to $8
• Fiber cement board – $3 to $6
• Wood – $7 to $12
• Interior finishing – This category includes everything from flooring and wall coverings to countertops and trim work. Carpet is the most affordable option for flooring, while marble is a luxurious choice for countertops.

Three typical budgets for building a single-family home

No matter your budget, it helps to know what you can afford within your price range when building a home. To help you choose the options right for your lifestyle and stay within your budget, we've broken down the costs of building a single-family home into three pricing tiers. 

Basic home 

The average cost to build a basic home is between $283,777 and $516,316. The home has all the essentials with builder-grade materials. In this category, you can afford the following features and materials:

• Asphalt shingle roof
• Vinyl siding
• Builder-grade cabinets and appliances
• Carpeting or laminate flooring
• A crawl space

Mid-range home 

The average cost to build a mid-range home is between $364,765 and $663,670. This budget tier includes upgraded furnishings, materials, and possibly a basement or garage. In a mid-range home, you’ll find the following features and materials:

• Architectural shingles
• Vinyl siding
• Semi-custom cabinets and upgraded appliances
• Luxury vinyl or ceramic tile flooring
• Possibly a basement or garage

Luxury home 

The average cost to build a luxury home is between $814,107 and $1,481,222. The home has all the essentials, many extras, and luxury-grade materials. Included in this category, you can find the following:

• Standing seam metal roof
• Brick or stone veneer siding
• Custom cabinets and built-ins throughout the home
• Commercial-grade smart appliances
• Natural stone or hardwood flooring
• A basement and a garage

How to budget for building your own home

Let's face it, building a home is expensive. Whether sticking with the basics or going all-out with a luxury build, the cost will likely involve financing. But, before you swing a hammer, draft a plan. That's where the help of a designer or builder comes in.

These professionals are trained to take your vision and put it down on paper. Their expert team of architects, designers, and project managers listen to your desires and create a plan of action. Then, you can add or take away from there until you settle on a budget within your means. 

Paying for your home build

Few homebuyers pay cash, especially for a new home build. For the rest of us, there are financing options. Once you have a workable budget, take the cost estimates to a lender to price your options. They won't offer you a mortgage because the home isn't built. Alternatively, they offer a construction loan. Construction loans are short-term loans with a lifespan of 12 to 18 months. You'll use this money to pay your general contractor up front. Once the home is built, the construction loan converts into a typical mortgage, or you'll need to refinance it.

Suppose you don't already own a home with equity that you can use as a downpayment on the construction loan. In that case, you'll need about 10 to 30 percent in cash for a downpayment.

Ways to save money when building a new home

If you've worked with a design/builder to pare down the budget and it's still more than you can afford, there are a few ways to save money when building a new home. Here are a few options to consider.

Make a few lists. Start the project with a list of must-haves and a list of nice-to-haves. Working with the builder, you may have already eliminated the nice-to-haves. But now, take a closer look at your must-haves and see if any can wait until a later date.

Start smaller. Ever look at how old farmhouses have multiple wings? People used to build small homes with one or two rooms. Then, as their families grew, they'd add and expand. If you have the time to sacrifice a little space, do that to save on your budget.

Use less-expensive materials. When you look at the wide range of costs for materials like roofing and flooring, you can save money by going with a less expensive option and still have a quality-built home.

Leave some things undone. Okay, you don't want to go small. But does everything have to go into your loan? Landscaping and hardscaping, outdoor living areas, and new appliances are some things that come to mind. Consider moving in with your old appliances or take time to save for that new patio.

Other considerations

Besides the things already mentioned, there are a few other items to consider.

Homeowners Association – Did you purchase land in a covenant-restricted subdivision? If so, the homeowner's association has the final say on what your home can and cannot look like outside. They may have strict guidelines regarding roofing and siding materials and colors. Or, they may have variances that differ from the ruling municipality. Before purchasing land, always ask to see the HOA bylines to ensure they align with your desires for the property and your lifestyle. Once you buy the property, always consult with the HOA before you start building.

Internet service providers – When moving or building in a new area, you want to make sure you have the connectivity you're accustomed to. This is especially true in rural areas, where internet service is not necessarily a given. Do your research and ask homeowners in the area how reliable their service is, how much it costs to connect it, and the alternatives.

Let's get packing

Building your own house can be both exciting and scary at the same time – and it isn't a solo sport. Work with a design or build firm in your area to successfully navigate the construction process. Their team of professionals will help you make your home-building experience a dream come true.