Buying A Building Cost NEW!
The median cost of new construction was $449,000 in May 2022. Comparatively, the median cost to buy an existing home was $414,200, according to the most recent data available from the National Association of Home Builders (NAHB) and the U.S. Census Bureau.
buying a building cost
However, the data reveals a significant drop in costs for those who already have a lot on which to build. A separate study from the NAHB, dating back to 2019, ballparks the purchase price for a plot to be 18.5% of the total costs for new construction. This bumps down the cost of building a home to an estimated $365,935 for those who already own a lot.
For example, buy a home in Ilion, New York, and you can expect housing costs that are roughly 800% less than the statewide average. But purchase one in Chelsea, NYC, and you can expect to pay dearly. The median sale price there in April 2022 was an astronomical $2 million, according to Realtor.com.
This article was written as global forces such as supply-chain issues and inflation were pushing construction costs sky-high, when making predictions was even more difficult than usual. But here are some factors that might swing your take on whether it is better to build or buy a house in 2023 and beyond:
If you know a local real estate agent and contractor, you may be able to model the cost of building for both a theoretical purchase and construction project, then compare them to see which is more affordable.
If you buy an existing home: According to the latest figures, the median cost of buying an existing single-family house is $334,500. For the average 1,500-square-foot home built before the 1960s, that comes to about $223 per square foot. That said, the exact price can vary widely based on where you live. (Go to realtor.com/local to see the price per square foot in your area.)
Last but not least, by building your own house, you get to design it to your exact specifications. If you have very clear ideas about how you want your home to look, this blank slate could be worth every penny.
If you build your own home: Recent construction almost always beats older homes in energy efficiency, says Kyle Alfriend of the Alfriend Real Estate Group Re/Max in Ohio. Homes built after 2000 consume on average 21% less energy for heating than older homes, mainly because of their increased efficiency of heating equipment and building materials. This translates into reduced energy expense every month, even with the higher square footage in many newer homes.
The average cost to build a house is just a little over $485,000.1 That estimate is based on a nearly 2,600-square-foot, single-family house, and the data comes from a 2020 study by the National Association of Home Builders.
Exterior finishes also include installing any openings in your house like doorways, windows and the garage. You can count on those costs being somewhere in the neighborhood of $12,000. Finishes on the roof will tack on another $10,000.
The best place to find a high-quality agent is our Endorsed Local Providers (ELP) program. Our team of RamseyTrusted agents in your area are rock stars who will make building a home seem as easy as making a sandwich. Okay, it may not be that easy, but you will seriously love working with our trusted pros.
Start by deciding how much you can afford to spend. (Remember: Your monthly house payment should be no more than 25% of your take-home pay.) Then, research all the expenses involved in building a home and figure out how much money you need to plan for each category. Your agent can help you with that.
A detailed blueprint or building plan is a must. Like we talked about earlier, this is where all of the key decisions about the house itself will be made. How many bedrooms? How many bathrooms? Where will the windows go? All of those questions (and many more) will be answered in your blueprint.
Once you make your decisions, you need to stick with them. One or two change orders during the building process are no big deal, but anything more than that could bust your budget and cause your schedule to have some big-time delays. Speaking of your schedule . . .
Buying a home can help you move forward quickly, which can come in handy if you are pressed for time. Although you may have to compromise on the perfect floor plan, buying an existing home is usually less time-consuming and less stressful.
On average, house plans cost around $5,000 but the exact cost will vary depending on how simple or complex your house is going to be and what types of building permits and preliminary inspections you may need. Building permit requirements will differ between locations, but on average cost between $1,200 and $2,000.
Which foundation you choose will depend on your budget and preferences. Each type has its pros and cons, so be sure to do your research. Most people won't be interested in buying a house with foundation issues.
Next up is framing. Think of this step as building the skeleton of your home. Floors will be framed and then covered with plywood. Walls will be framed, raised and then sheathed with plywood or oriented strand board. Then, the trusses that will frame the roof are built and placed on top of the wall frames.
Of course, special features can raise the cost of your outdoor space considerably. In-ground pools, for example, can cost anywhere from $36,000 to $100,000, while outdoor kitchens can cost around $13,840.
Construction costs can fluctuate greatly depending on the availability of materials, too. With more accurate quotes, you can figure out how much house you can afford and what the final square footage could reasonably be.
Your overall cost can be affected by all sorts of factors, including current real estate trends, the availability of materials and labor in your area and the types and qualities of the materials you choose.
Building a home rather than buying one allows you to customize it to your needs, among other advantages. However, construction timelines have lengthened due to material and labor shortages, and this trend is being reflected in price tags. The average price of a new-construction home in November 2022 was $543,600, up from $496,900 in January 2022, according to the U.S. Census Bureau.
The costs of building a home include labor, supplies, permits, architectural drawings and inspections. You can cut down on expenses if you do a lot of the work yourself and select cheaper materials. Overall, the cost of building a home is largely contingent on how much you choose to spend on each component of the project.
Shopping for a competitive mortgage is key to lowering the costs associated with buying a home. Negotiating fees with the lender, purchasing points to lower your interest rate, and applying for down payment or closing-cost assistance can all be a part of your saving strategy.
And thanks to inflation and supply chain problems, builders are also paying more for building materials and things they need to build houses, like workers and fuel. All that to say, building a house is not cheaper than buying!
And be careful! All those little details and decisions caused Jayson, a member of our Ramsey Baby Steps Community on Facebook, to get caught up in the excitement of building a new home and spend more money.
In certain scenarios, you may get more dream house for your buck if you build a new home rather than buy an existing home. So how much does it cost to build a house? Is it cheaper to build or buy a home?
The cost to build in 2023 will have a wide range, anywhere from $112,000 to $460,000, with a national average of around $281,000, which does not include the land. In comparison, the U.S. Census Bureau puts the sales price of a new on-site home at an average of $543,600 at the end of 2022.
The amount of lot preparation required also needs to be calculated into your building costs, which HomeAdvisor estimates between $1,300 to $5,600. This can include expenses such as soil testing, land excavation, grading, and surveyor fees.
To cover these costs, financing it is something many buyers need to consider, as land loans are often separate from new construction loans. Nadia Aminov, a Baltimore, Maryland, real estate agent with 18 years of experience, was herself put off by the financing process.
The average cost to install a foundation is $8,609. While a simple slab is on the lower end, if you want to create a basement (to potentially furnish later), costs increase with more material, reinforcement with rebar, and additional excavation.
Building your house into your desired shape, a process called framing, costs about $20,000 to $50,000. Since framing typically requires wood, keep in mind that lumber prices have been soaring since April 2020, a trend that could increase this aspect of your home-building costs.
On a national average, a new roof typically costs $10,000 to install. However, this estimate will go up if you want options beyond the traditional asphalt shingles, or if you have a larger-than-average roof.
Dreaming of granite countertops for your kitchen? This high-end option will come at a premium cost ($40 to $100 per square foot). Choosing solid hardwood flooring ($7.80 per square foot) will also cost you.
In July 2022, new home construction usually cost around $150 per square foot, with luxury and custom options costing $500 or more per square foot. The average new-construction home size is between 2,200 square feet, and the total average construction cost is $281,000.
Region is one of the biggest cost factors in building your own home. Just as it would cost more to buy an average house in San Francisco than in St. Cloud, Minnesota, the same goes for building a house in different regions of the country.
To design your floor plan for a custom home, hiring an architect will cost about $5,786, on average, with their actual fee being somewhere between 5%-20% of the total project cost. However, you can save a bit by working with a draftsperson instead, which will cost around $1,800.
The home builder your agent connects you with should be able to walk you through the expected costs and timeline in detail. Your agent can also work with you to identify suitable vacant lots or tear-down opportunities. 041b061a72