What Does It Cost To Build a House?

The cost of building a custom home may be confusing at first. It’s not the same as just buying an existing home, and it’s important to understand where your money will be going. 

According to the National Association of Home Builders, the average cost of constructing a home in 2017 was $428K. This average home had 2,800 square feet, and it came out to about $153 per square foot of living space.

Of course, the overall cost of building a custom home will depend on the location, the size, the materials used, and the current real estate market. Let’s look at the most expensive parts for custom home costs to help you better understand where your money will be going.

Building the house of your dreams helps to understand the cost breakdown and some of the most expensive parts of building a home. The key to staying within your budget (while still having everything you want) lies in making wise decisions. Keep in mind these top five expenses when it comes to the cost of building a house.

Quality construction is never a cheap prospect, but some elements can drive up building costs more quickly than others. Most homeowners have a construction budget, which requires making choices when it comes to pricey items. The key to staying within your budget is to select affordable options without compromising your home’s integrity.

Your new home construction should not break the bank, but it’s very easy for that to happen if you’re not working closely with a professional and paying attention to all the moving parts. We know that building your own home can feel like a daunting task. For those who have never been through the process, new home construction can seem like a dark cave – deep, scary, and full of unknowns. What most people worry about is keeping the price of their new home construction project within their budget. The cost of building a house does not have to be scary, and it just takes a lot of planning and knowledge.

When you buy a pre-owned home, the price is pretty upfront. You give them this much money, and they give you a completed house. But, when planning to build a new home, costs have a way of expanding while your home is under construction if you are not paying attention. Knowing how to manage these potential budget busters can help keep your costs low and the entire project well within your budget.

Working with a residential architect who knows and understands your needs and must-haves will help you design an affordable house while still addressing your family’s demands. Your architect should know your budget and help keep your newly built home well within your price range. Communicate openly with your architect about how much you plan to spend as well as your priorities for the overall design for your home.

Your architect can help you design an open footprint that can keep your house’s size low while also maximising the use of space within its walls. For example, a kitchen doesn’t have to be gigantic to have everything you need; it just needs the right ergonomic design to place what you need where you need it. The right architect can help you achieve big dreams in small spaces.

Next to your architect, the other person you need to choose wisely and communicate with regularly is your contractor. First, select a contractor through a competitive bidding process and be sure whoever you choose understands and respects your budget. You don’t want to be arguing with your home builder the whole time your home is under construction over prices and budget, trust us!

A good contractor will work to keep you on your budget by helping you select materials that match your needs as well as managing all their subcontractors effectively to keep their costs down. Communicate clearly and precisely with your contractor at all times about what you want and how much can be spent. Clear expectations are essential to finishing your home at a price you can afford.

If you have the knowledge and skills (or have friends and family who do and are willing to help), talk with your custom home builder about doing some of the work on your newly built home yourself. You can even opt to eliminate some things from your contract with your builder and do them yourself once you complete the house. Hanging cabinets, finishing floors or countertops, painting, and installing hardware on cabinets and doors are things many homeowners feel capable of doing, which can save you significantly on labour costs. Don’t go this route if you don’t have the skills, though, as mistakes could end up costing you later on.

Interior Finishes

One of the custom home costs with plenty of variables, interior finishes, tends to be a very expensive part of building your new home. 

On the average $428K home, expect to spend about $68K on interior finishes. This category includes:

  • Cabinets
  • Countertops
  • Doors
  • Trims
  • Mirrors
  • Drywall Installation
  • Flooring
  • Lighting
  • Painting
  • Insulation
  • Appliances
  • Plumbing Fixtures
  • Fireplace


A standard bathtub runs a few hundred dollars; an oversized soaker or spa tub can double, or triple, the cost. Steam showers, bidets and walk-in showers are all expensive when compared to their respective base models. A chandelier can run $500 or more. Multiply that by six or seven rooms, and lighting fixture costs become prohibitive. Smaller lights illuminate just as well for a fraction of the price.

Cabinets and Trim

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You can dump a fortune into kitchen cabinets if you go the custom cabinetmaker route, but ask yourself if you need that tropical hardwood or Mediterranean stone countertop. If so, this might be where you choose to splurge, but a good finish carpenter can install crown moulding and dress up sturdy base cabinets, making them look more expensive than they are. Kitchen appliances come in a wide range of quality and cost. You can purchase a single high-end range for more than what you would pay for an entire standard appliance group, including range, fridge, microwave and dishwasher. If you’re not a professional chef, this is one area in which you might save.


If you’re building in a neighbourhood with a homeowners association, you might have to install a specific exterior cladding, such as a minimum percentage of masonry on your house. If the choice is all yours, be aware that stone and brick are expensive in comparison to standard clapboard siding. The same holds true for roofing materials. Composition shingles are more affordable than wood shingles, tile or slate.


The general rule is to buy the best windows you can afford. Windows run the gamut from cheap and flimsy to inordinately expensive but of superb quality. Going with $30,000 of triple-pane, argon gas-filled windows in a $130,000 house is probably too high, but the cheapest brands are rarely energy-efficient. They can be a struggle to open and close due to poor manufacturing quality.

This is one area of custom home costs where you do have some control, however. Upgrading the interior finishes will certainly cost more, but it may also give you something you specifically want in your custom home.


The next most expensive of the custom home costs is framing. When it comes to actual home construction, framing will be the most expensive part of the process. Based on the same $428K figure for the average custom home, framing will eat up about $41K of that budget. 

The cost of framing will depend on the materials you choose and the size of the home. It’s the skeleton of the house, including the roof and will require plenty of lumber. Using trusses may reduce the cost of framing, while adding metal or steel to the framing of a home may increase the budget.

While exact framing costs can sometimes be tricky to predict, general guidelines can help you understand what will drive costs up.

  • Size: The bigger the house, the more expensive it will be to frame.
  • Type: Stick framing is the most common and least expensive (approximately $100 to $200 per square foot). Timber framing is a special type of framing that uses carpentry techniques rather than nails to hold the frame in place. It costs approximately $100 to $200 a square foot.
  • Materials and labours: The price of lumber plays a big role in the total cost. The cost of labour plays less than one, but it still needs to be taken into account.

In order to obtain an honest, accurate, and detailed cost estimate, it’s important that you choose a trained and trusted professional.

Exterior Finishes

This category includes the exterior walls of the home, which are rather important and also quite expensive. The walls will require a lot of material as they will support the home structure and keep outside weather where it belongs; outside. 

Along with the exterior walls, exterior finishes will include any openings for the windows, the garage, and doorways. This category also consists of the roof, which eats up a sizable amount of the budget. It’s usually cost $33,000

The exterior wall is an expensive line item ($15,000) because it covers your house’s perimeter, and that requires a lot of material. It also supports the roof and structure of the house and prevents outside weather from getting inside, ensuring that when the weather outside is frightful, your home will be delightful.

Exterior finishes also include installing any openings in your houses like doorways, windows and the garage. You can count on those costs being somewhere in the neighbourhood of $9,000. Finishes on the roof will tack on another $8,000. This is another category where you’ll want to have at least a $1,000 cushion.

High Ceilings Mean High Prices

Most people love the spacious feel that comes with 10-foot ceilings. The problem is that high ceilings are for aesthetic purposes only; they don’t give you additional floor space, and they add substantially to the cost of a new house.

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Sheet materials come in 4-foot-by-8-foot panels, which fit lengthwise or double as horizontal rows on standard 8-foot walls. But by adding a couple of feet to the walls, not only does labour increase for fitting sheet materials, but vertical wall framing costs increase, fire-blocking becomes necessary in stud spaces and exterior cladding, or covering, needs increase. Lower ceilings keep utility bills, as well as construction costs, down.

Other Home-Building Breakdown

Site Work: $16,000

After you decide on your property, you’ll need to pay for site work—such as inspections, permits and building plans—to prepare for the actual construction. The steepest cost here includes fees for water and sewer inspections, which will flush away about $5,000 of your budget. Next in line are the $4,000 of fees (give or take) to obtain a building permit.

For engineering and architecture, you’ll need about $3,000. Pro tip: Have your architect and builder develop the plan together. Don’t let an architect who doesn’t know anything about building win you over with pretty pictures! Your builder can make sure your architect isn’t drawing something ridiculous or super expensive to build.

Remember, Uncle Sam wants his share too. The government will also charge you about $2,000 for something called an impact fee, which pays for public services like roads, parks, and water treatment in your new community. Lastly, leave room for a $2,000 buffer.

Foundation: $26,000

Foundation work is where the real fun begins! This is when you’ll break ground on your new home. Breaking ground, or excavation, requires heavy-duty equipment and expert operators to make sure the land is level before laying the foundation of your house. And know that if a bunch of large rocks are hiding beneath your plot of land, excavation costs could shoot up.

After excavation, your builder will lay the foundation for your home, which usually includes lumber and concrete. Homes with basements typically cost more than ones without because there are more square feet to cover.

Your house could also need retaining walls installed to hold back surrounding soil from crumbling and falling onto your foundation. Since foundation work requires specialised equipment, material and labour, the cost usually cuts into $25,000 of the budget, but prepare for an extra $1,000 just in case.

The foundation sets up the success of every other building phase. Casually throwing together a “straw-and-stick” budget here could crush you with unexpected costs! So plan on these expenses, folks!

There are two key determinants for foundation price:

  • The location of the home. Local material costs influence the foundation price, as does the skills of local labourers. In some locations, contractors stick to building one type of foundation—becoming highly skilled and competent in the foundation they build, but not with others. Homebuilders may see a price increase when choosing a foundation that their local contractor doesn’t typically build.
  • The type of foundation. A slab foundation is the simplest and cheapest type of foundation. Perimeter foundations and full basement foundations require more materials and labour and are more expensive.

The foundation is what your entire house will be built on. Finding someone you trust to build your foundation is important for cost savings and peace of mind.

Major Systems Installation: $33,000

Installing major systems in your house will cost about as much as the exterior finishes. Major systems include HVAC ($11,000), plumbing ($11,000), and electricity ($10,000). Sure, you could trim the budget here, but we’re assuming you’d like to avoid outdoor plumbing.

Let us give you a heads up: These costs don’t refer to the actual fixtures (sinks, toilets and lights) that hook into plumbing and electrical systems. Those fixtures are grouped into the cost for interior finishes. On top of these major system costs, keep an extra $1,000 in your reserves.

Miscellaneous Construction Costs: $4,000

Above and beyond the “buffer” amounts built into each stage, most home-building projects require $4,000 for a separate, miscellaneous category that goes toward the overall construction cost. So plan for that extra $4,000.

Sales Price: $190,000

As the final and heaviest brick of your house-building budget, you’ll need to plan for the sales price. Had you decided to buy an existing home (instead of building one), your sales price would be in the hands of the seller, their real estate agent and an appraiser. But when you build, the sales price is determined by your builder and a bunch of vendors. After the construction costs are handled, the price to purchase and own your new house includes several line items—the most expensive being finished lot costs ($92,000).

Another whopping cost is the profit your builder and vendors make on the project, which can come in at about $46,000. Other budget items include overhead and general expenses ($22,000), sales commission ($17,000), financing ($8,000), and marketing ($5,000). That’s right. You probably never would have met the crew that builds your house if it wasn’t for their marketing and sales efforts, which are costs that get plopped into your lap.

The Bottom Line on Controlling Costs

In the long run, you want your home to last, serve your needs, and not break the bank. And, it is possible to have all of those. Frugal and cheap are not the same thing, and you can save money on your new home construction without being a penny-pinching Scrooge. Professional and reputable architects and contractors can build the house you want that also allows you to live within your budget, so be sure you choose yours wisely.

What costs will you have to pay that you don’t see coming?

The average cost to build a house in 2017 was $428,000.1; that estimate is based on a 2,800 square-foot, single-family house, making the cost to build a house about $153 per square foot. 

But before you rush off to the bank, hang on! There are different strokes for different folks. The cost to build a house is based on changing factors like size, location, labour, materials and current real estate trends, which make it impossible to nail down a perfectly accurate, one-size-fits-all answer. So let’s break down the average cost to build a house into each stage.

Buy the Property

First, this is a no-brainer, but if you haven’t already bought the property where your house will be built, find a quality real estate agent. These experts, also called buyer’s agents, will help you hunt down and negotiate a deal on land for the perfect location to build your house. A good agent will know where to find up-and-coming areas so you can plant roots in a spot that’ll make your home more valuable over time, which is what you want.

Make the Plans

Now, once you’ve found that lovely plot of land, get ready to make a lot of decisions! In each phase of construction, you’ll make dozens of choices that affect the cost to build your house! You’ll need to start off with a well-planned, detailed vision of the home you want. And we don’t just mean the number of rooms and finishes. If you don’t decide on your budget, you’ll end up making a ton of change orders.

Change orders are work items that need to be added or removed from the original set of plans. They’ll send your budget through the roof and drive your builder crazy! (Don’t do this, people!)

To help you prepare for the decisions you’ll have to make at each stage of the home-building process, we’ve broken down the typical costs to build home into separate stages, beginning with site work and moving to landscape—and even the final sales price. While we can’t read your mind and predict how much it will cost to build the house you have in mind, we can show you what costs to expect and when. Let’s dive in!


Each has its pros, cons, and price. Because many factors (children, pets, local weather) influence flooring decisions, it’s important to have a discussion with a flooring expert when making your decision. It should be noted that in some cases, the costs associated with flooring installation can tremendously increase the total flooring cost.

This information can help guide you as you make important building decisions. Remember to stay patient and always use recommended professionals you trust. Their expert skills and knowledge help build dream homes with ease.

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