The construction costs of building a home are about 35% cheaper than buying an existing new home, but this can change depending on the price of materials, finishes, and more.

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Thanks to HGTV’s constant stream of charming home inspiration, most of us have the custom build bug. After spending so much time indoors in recent years, it’s easy to see why the idea of building a home to meet our exact needs and preferences is so appealing. 

The rising home prices may also have you wondering whether it’s worth pursuing a custom built home. The median price of a new single-family home was $450,600 in April 2022 — that’s up 16% from a year ago when the home sale price was $376,600. 

If you’re strategic, it can cost less to build your own house, and you’ll end up with a home that perfectly meets your needs. But if you choose to invest in the finest building materials or a design-savvy architect, you’ll likely find that the custom build costs much more than an existing home, even a new construction

How much does it cost to build a house? 

How much it will cost you to build a custom home depends on how large you want the home to be and the types of features and upgrades you choose. To get a baseline idea of what it may cost to buy a home, you can expect to pay between $100 and $155 per square foot. 

Median size home   Average size home
Square footage 2,310 2,512
Cost $251,200 to $389,360 $231,000 to $358,050

You can expect to pay between $251,000 and $390,000 to build a home of average size — 2,512 square feet (according to 2022 quarterly stats from the Census Bureau).

Where you live and what current supply and labor costs are can also affect how much you’ll spend. For example, spending $250 per square foot would bring the total cost of building your home closer to $600,000.

Average cost of building a home in 2022

The cost of building a home comes down to materials, labor, flat fees for permits, as well as land. These costs can rise substantially if you choose to build a really luxe home or hire a fancy modern architect who charges steep fees. There are also factors you can’t control, like the recent unforeseen volatility of lumber prices, spurred by the coronavirus pandemic. 

The material cost of building a home in 2022 is $331,896. This is the price of a 2,594 square foot home, based on a study by the National Association of Home Builders, which we’ve adjusted to account for inflation.

Here is a more detailed breakdown of average costs that go into building a house:

Materials and construction costs

  • Site work: $20,500
  • Foundation: $39,990
  • Framing: $57,720
  • Exterior finishes: $36,643
  • Exterior wall: $21,614
  • Roof:  $11,137
  • Windows and doors: $13,143
  • Interior finishes: $84,200
  • Appliances: $5,270
  • Cabinets and counters: $15,150
  • Flooring: $13,423
  • Systems (plumbing, electric, HVAC): $48,856
  • Outdoor (driveway, deck, patio, landscaping): $22,506

Keep in mind that there are a lot of factors that can decrease — or increase — the costs of building your house when it comes to the materials. For example, vinyl siding will cost less than stucco or brick; laminate floors will cost less than wood; and any high-end interior finishes will cost you extra. 

Labor costs

  • Architect: 8% to 15% of project costs, or $125 to $250 per hour
  • General contractor: 10% to 20% of project costs
  • Structural engineer: $100 to $200 an hour
  • Electricians: $50 to $100 per hour
  • Plumber: $45 to $200

If you need help making your vision come to life, you can choose to hire a custom home designer, but it will cost you a pretty penny. Architects and designers are paid an average of 8% to 15% of your total construction costs, so hiring one would mean you’ll pay anywhere from $26,000 to $50,000 based on our example. This could cost even more if you hire a well-known architect who charges higher fees.

Land costs

Don’t forget that building your own home means you have to buy land, too. While buying land can be easier than buying an existing home, it won’t necessarily come cheap depending on where you live. An acre of land may cost less than $2,000 in New Mexico, but closer to $200,000 in New Jersey. 

Fortunately though, you don’t need a full acre of land to build a house —  the average lot size is 0.37 acres (or 16,032 square feet according to Census data) — but depending on your desires for green space, a yard, or even a pool, you may want more.   

Read more about how much an acre costs.

Pros and cons of building a house

In a dream world, we would all build custom homes to meet our exact preferences. However, building your own home isn’t always all it’s cracked up to be. There are some key advantages and disadvantages worth considering when deciding whether or not you should build a home. 


  • Full customization: When you build your own home, the sky’s the limit when it comes to design (as long as you have a budget to match your vision). Do you want a primary bedroom on the bottom floor with French doors that open up to the garden? How about a laundry room with a mini shower in it designed to make washing your dog easier? It can be yours. 
  • Less competition: Securing an empty lot of land is usually easier than buying an existing home, especially in today’s market. The competition for homes can be steep and you end up in a bidding war for the best house on the block. Chances are, you will have less competition on your plate when you do a custom build. 
  • Minor maintenance: When you build a home and everything is brand spanking new you won’t have to worry about major maintenance costs for many years, especially because new homes can come with warranties for major systems and appliances. 
  • Health benefits: When you build a new home you know every last inch is up to code and that you won’t find lead paint or a trace of asbestos in the home. 
  • Energy efficient: When you build your own home you can choose to make it more energy-efficient, which benefits the environment and potentially your utility bills, too.


  • Unexpected costs: You can plan as much as you want, but unexpected costs will arise when you do a custom-build project. Supplies and materials (like lumber) can rise and fall in cost over time, making it difficult to create a precise budget.
  • More planning and decisions: It takes a lot of time and effort to build a brand new custom home. This process will be a lot more complex than buying an older home or a new construction. There’s no denying the convenience that comes with buying an already-built (or soon-to-be-built) home. 
  • Expensive financing: It can be much harder to secure financing if you need to borrow money to build the home from scratch. If you don’t already own a home, then you may not have much collateral on your side to back the loan. Loans for custom builds often come with much higher interest rates and require a larger down payment. You’ll take out a construction loan, not a mortgage. If you have most of the cash you need to build your home, you can take out a personal loan to cover the remaining costs. 
  • Delayed timeline: if you need to stick to a tight schedule, then a custom build may not be the way to go. Your timeline can shift because of bad weather or supply chain issues. Make sure you have a clear contract in place with any laborers so you can get a clear idea of what their contributions will cost and what happens if there are delays on their end. 
  • Permit and contract hassles: You’ll have to deal with contractors and subcontractors when you build your own house, adding another layer of negotiations and timelines. 
  • Land improvements: If the plot of land where you’re building a home doesn’t already have water and sewage systems set up, it can be very time consuming and expensive to make the land livable.

Should I buy or build a house?

A custom built home can be a good investment since people like new and unique homes, but if you go too far with customizations that are purely suited to your distinctive tastes, then you may have a harder time finding a buyer down the line. 

Related: Learn about homeownership and wealth.

Whether or not buying a house or building a house is a good idea depends on your situation and personality. It can be very time consuming and stressful to build a home from scratch, and you’ll need to be a shrewd planner and decision-maker.

The perks that come with building your own house that looks and function exactly how you want can be tempting. Unfortunately, that dream comes at a cost. Building a house can be cheaper under the right circumstances, but you need to have the knowledge and insight into finding the right people and materials to make the equation work. Most people probably don’t have these connections and won’t want to deal with the hassle of shopping around to find the best deals on quality labor and supplies for every aspect of their house.  

If you have ample financial resources, patience, and a place to live while you build (no set timeline to move by), then you may find a custom build is worth all of the extra work. Otherwise, the convenience of an already built-home may win out over customizations and design.

Cheaper alternatives to building your own house

If you really want your home to have a custom look and feel, you can try buying a fixer-upper and renovating it, that way you don’t have to start entirely from scratch. (Be forewarned though: renovating an existing house can also get costly.) 

You can also consider buying a modular home, which is cheaper than a traditional home but can be customized to your liking.

If you’re looking to to buy a house — including a new construction — Orchard can help. We can even turn you into a cash buyer so your offer makes it to the top of the pile.

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