If you dream of becoming a homeowner by building a house, you’ll need to consider several factors. While customizing your future home may seem ideal, knowing the cost can help you decide whether building is right for you.
The average cost to build a house in 2024
You can expect the construction of a new house to come with an average price tag of $329,000 (not including land), but the total cost could reach upwards of $900,000 depending on location, materials and labor. Remember: This is an estimate, and the true cost will reflect your home-building preferences.
Breakdown of homebuilding costs
The materials and services you need to get started can also influence the price. These average costs can help you allocate your budget:
With the savings buckets tool in our Ally Bank Savings Account, you can set aside money for various construction-related expenses before you even begin to build your home. If you need help financing the building, you can look into getting a standalone construction loan or a construction-to-permanent loan. A traditional mortgage cannot be used to finance new construction.
Read more: Start saving for homeownership with Ally Bank Savings Buckets and Boosters.
Factors influencing the cost of building a house
Make sure to assess your preferences along with what your budget can handle when it comes to building expenses.
Location
Areas with more expensive land, materials and labor can increase your total cost. Consider whether you want to live in a city, suburb or buy a vacant lot to start calculating a potential budget.
Size and layout
As you would expect, the larger your home, the higher the cost. In 2023, the average single-family home built was 2,233 square feet. How you divide the area is also important — more rooms mean more interior finishing.
Materials and finishes
Home improvement trends matter as much as the materials. For example, the increasingly popular vintage look might make features like colorful wallpaper or a claw-foot tub more expensive.
Labor costs
How much work needs to be done, and where, can determine what you pay for labor. Using special materials or a custom plan, which can require building everything from scratch, can also increase the cost.
Permits and fees
You’ll need a building permit and possibly a general contractor, who may charge service fees. Some states allow owners to build their homes, but a contractor may help you avoid expensive mistakes.
Leave complex features to the professionals, but do smaller projects yourself, like painting, to save up to a few thousand dollars.
Ways to save on new home construction
If you’re looking for places to reduce expenses, you have several options:
DIY projects. Leave complex features to the professionals, but do smaller projects yourself, like painting, to save up to a few thousand dollars.
Compare contractor quotes. Shop around for one that will ensure a smooth construction process without adding financial stress.
Choose cost-effective materials. Bringing your vision to life can take time, but being flexible can help you save on otherwise expensive materials.
Opt for energy-efficient materials. You can save on short-term construction expenses and on future homeownership costs.
Is it cheaper to build or buy a home?
Building a house costs an average of $329,000, not including land, while buying a home costs an average of $360,681. Keep in mind: Prices fluctuate depending on the location. If you decide to buy an existing home, you can work with a lender like Ally Home to finance your new purchase without any lender fees.
Do the math, then decide
Price is important, but it isn’t the only factor to consider when deciding whether you should build a house. The specific features you want in your future home can also help you decide — just remember to balance your preferences with your budget.
