Many people looking to build a home often wonder exactly how much it will add up to, and how much new home construction costs per square foot – but this is not an easy question to answer. There are many factors and steps to consider when estimating new home construction costs.
So, let’s break down the process piece by piece so you have a framework for better estimating your new home construction costs.
How to Estimate the Cost of a New Build Home
1. Determine Your Floor Plans
Start by selecting a floor plan for your new home that’s been completed by or adjusted by a local general contractor or architect, or search online or through books to find the plan of your dreams. Many builders will have a breadth of floor plans to choose from. These floor plans will determine the size, style, quality and features you desire in your new home and will be the baseline for your project from here on out.
Next, you should find the right local builder. The builder you choose should be one who routinely constructs new homes that are comparable in size, style, quality and features to the new home you’re hoping to build. Finding a suitable builder for your project is important in maintaining a proper execution, timeline and budget for your build. They should be able to tell you their cost per square foot to build a house that is similar to yours, and at the same time they should be able to give you an approximate idea of what your home might cost to build. It is always a good idea on your end to ask what exactly the new home construction cost includes.
2. Determine How Customer Plans Can Affect the Cost
- A complete custom home build requires the most participation, but you can work directly with an architect to build exactly the type of home you want. This option requires a lot more decision-making on the buyer’s end, but you can determineyour priorities and customize all materials, products and styles.
- Understand the entire size, design and floor plan. You may be starting from scratch here, and each of your choices will impact the overall price. It is very helpful to have an architect or designer who understands the costs associated with the items that you are suggesting for your home, so that you can fall within a ballpark range of your anticipated budget.
3. Learn How Pre-Designed Options Can Save You Money
- With a home that’s pre-designed, and maybe already in progress, many decisions and selections have already been made. There are certain “specs” that will have been assumed when designing and putting a price on the house and in many cases, you can choose from a range of lower or higher cost items (depending on your priorities) from the builders selections. Depending on how far along the home is, you may have the option to select:
- Flooring, lighting fixtures, appliances, exterior siding options, granite, quartz, and laminate countertops, wood cabinets, bathroom and kitchen fixtures, doors, trim, paint colors, etc.
4. Find the Right Builder
The builder you choose should be one who routinely constructs new homes that are comparable in size, style, quality and features to the new home you’re hoping to build. Finding a suitable builder for your project is important in maintaining a proper execution, timeline and budget for your build. They should be able to tell you their cost per square foot to build a house that is similar to yours, and at the same time they should be able to give you an approximate idea of what your home might cost to build. It is always a good idea on your end to ask what exactly the new home construction cost includes (i.e. are they including the land, the sitework and landscaping or other items beyond the “stick and bricks”).
5. Get an Idea of What Your New Home Construction Costs Per Square Foot
Arriving at an exact figure for new home costs per square foot might not be realistic, but getting a ballpark idea should be possible. To do this, take the total cost of your project, as outlined by your builder, and divide this by the total number of square feet in your project.
For example, if your new home is to be 2,000 square feet and your builder estimated that it would cost $350,000 to build, then your cost per square foot is 300,000 divided by 2,000, or $175.
According to Zillow, the median home value in Rockingham County is $375,424. Rockingham County home values have gone up 4.3%, and the median list price per square foot in Rockingham County is $224. The median price of homes currently listed in Rockingham County is $424,900, while the median price of homes that sold is $367,900.
It’s important to note, however, that these figures do not differentiate between new construction and buying an existing home, and it is safe to assume that new construction is likely to skew a bit higher, but will also include more energy efficient and modern materials and processes.
You can also compare your desired build to other newly constructed homes (again, those similar in size, style, quality and features) in your area, then take the price of the home – minus the land it is on – and divide this by the amount of square footage in the home you wish to build. By doing this exercise with a few homes, you can also determine whether the estimate for your new home that your builder has provided is competitive and reasonable.
- Average square footage of new homes built for sale in the Northeast Region has increased 76% over the past 45 years, according to New Hampshire Housing Authority March 2020 Housing Market Report. The average household size has decreased 23% from 3.4 people in 1989 to 2.62 people in 2018.
6. Know What Style, Quality and Features Refer to in Relation to Estimating Your New Construction Cost
The final price of your new home won’t be determined just by the size. Style, quality and features must not be overlooked when determining new home constructions costs.
Style refers to the architecture of the new home. Homes that are more square or rectangular cost less per square foot to build. The same is true for a two-story versus a one-story home with the same footprint, because a one-story home will require the same size roof and foundation, without the additional square footage to support those underlying costs. As well, homes that boast a deeper design (greater than 32 feet) might also require a roof with specially designed trusses. Essentially, the more angles and corners you add, the more labor, materials and cost you will incur.
Quality choices apply to the actual materials used for building. This can include a myriad of possible selections. For example: flooring, paint, insulation, shingles, cabinetry and built-ins, appliances, doors and windows. The higher quality you choose for each of these items, the more costs your new home will incur. It always helps to check out your options with your builder before making a decision, preferably in an interactive design center.
Features refer to design considerations, such as vaulted ceilings, roof pitches, curved staircases, etc. Each of these additions to a build can increase the price tag on your new home and elevate the estimated square footage costs.
7. Leave Room in Your Budget to Accommodate Ant Additional Construction Costs
When estimating the cost to build a new house, don’t forget to factor in some common expenses that can be overlooked in the excitement of a new home build. These include:
If you have to clear a lot of trees, haul in dirt, grade or remove large rocks, expenses will increase.
Local building codes, zoning laws and restrictions mean permits need to be obtained for work related to sewers, electricity, occupancy, etc. Depending on the area, these permits can add up.
8. Understand How Time of Year Can Affect Costs
When your build is scheduled can contribute to the cost of construction. When labor is in demand during times of low unemployment and economic growth, costs are typically higher as expenses to employ the many subcontractors and many other trades involved in building your home will be higher (due to simple supply and demand).
There may be more labor availability during the winter, but the cost to heat the space during the colder months while your contractors and vendors are on-site needs to be factored in.
9. Be Proactive to Avoid Cost Overruns
Above all, it is crucial to prepare for cost overruns when determining a new home construction cost. If you can actively remember that the finished cost of a home is often more than the original bid price, due to factors encountered along the way, you can work to avoid this outcome. For some, it can be too easy to get carried away and fall in love with higher-end flooring materials, vaulted ceilings, elaborate landscaping and so on. But every time this happens, the price of your new home build increases. When something is chosen that is outside the contract this is called a “change order” and if you are working with an experienced builder they should be able to quantify these upcharges for you so you can make an informed decision.
Start by working with your new home builder to create as detailed a construction contract as possible. The more detail this contract reveals, the more accurate your estimated new home cost will be, and the more likely you are to stay within your budget.
Some key components to identify in your contract should include:
- Realistic allowances
- How you define heated or unheated spaces
- How a garage or basement might be included/handled in the contract (finished or unfinished)
- If land is included in the square footage costs
- Liability insurance costs
- Utility connection costs
- Septic system costs
- Driveway costs
- Sidewalk costs
- Landscaping costs
- Subcontractor costs
- Green materials costs
- Inflation for a delayed build
New Home Construction Costs
In the end, it is a good idea to assume an additional 10% to cover unexpected costs, but the right new home builder should be able to help you stick to your budget. Also, you can always work backwards to keep within your budget. This means knowing what you can spend then designing a house to be built in an area you can afford with the style, quality and features that will fit your finances.
What are some typical big ticket items, and how to they contribute to higher cost?
- Material cost: There are so many choices in the quality of the materials that you choose to include in your home. It is helpful to decide your priorities in terms of budget versus higher cost items. Just like the choices that you make when you purchase any consumer product, only you know where you are willing to invest more. An example would be MDF (medium density fiberboard made from layers of Grade C or B plywood) versus full wood cabinets.
- Labor cost: Labor costs fluctuate significantly based on factors such as unemployment rates, time of year and building cycle demand. In a booming economy with a low unemployment rate, you will pay more for workers as a simple matter of supply and demand.
- Permit fees: Each municipality or town sets its own rate for the fees related to construction and occupancy permits. If you require a variance from a town ordinance, you will need to figure in the cost of the fees, as well as any sort of legal representation or engineering plans that you may need.
- Site preparation: If you are working from a site that you purchased on your own, you may encounter unstable soils or ledges that require blasting. It is hard to know for sure until you actually get into the ground. The need for drilled well and septic versus public water and sewer will also be a factor.
- Foundation: Your foundation shape will be impacted by the floor plan of your house. A simple foundation will be less expensive than one that has lot of jogs and uniquely shaped bump outs.
- Framing: Like the foundation, the complexity of your plan will determine framing cost. If you have multiple roof lines and intersections of space, this will increase the cost. These details can add a lot in terms of dimensions and visual interest, but if you are working with limited resources you may choose to spend your budgeted funds elsewhere.
- Exterior finishes: Exterior finishes (such as your siding), include the material and style (composite or wood, board and batten, cedar shingles, etc.) and special design elements such as a cupola or a front entry porch.
- Major systems: Your major systems include your heating, electrical and plumbing. Choices around options like geo-thermal or solar will impact the cost as will water filtration systems, radiant heat and forced hot or cold air, among other costs. Some choices will require more of an upfront expense but will save on energy costs over time.
- Interior finishing: These are your selections related to the personal details that you will live with every day. Flooring, crown moldings and trim packages, hardware, counter surfaces and cabinets are examples of such items. It is helpful to visit a design center to touch and feel the differences between the materials and decide which is more important to you. You may have your heart set on quartz and then find a marble product that is very similar and easy to procure, or vice versa.
- Final details: How you choose to furnish and light your space will be elements that contribute to the final aesthetic of your home. If you need a wine cellar to store a wine collection, or art lighting to accent special pieces, these need to be figured into the cost.
- Size: Although intuitively one would expect that a larger home will cost more, size does not always equate to “price per square foot.” A smaller home that has lots of complexity and detail will cost more per square foot than a large rectangular home with a relatively simple plan.
- Number of stories: Price per square foot usually goes down when you have two stories to provide more square footage to allocate to the underlying costs of systems and foundation. A single story ranch will often cost more on a per square foot basis than a two story colonial with a similar foundation, since you have much more space that is covering that cost of the same footprint.
- Shape: As mentioned before, the more complex the shape of the house, the more likely your costs will increase for foundation, frame and trim detail.
- Type of roof: Shingle rooks are still very common, but more and more buyers are choosing metal as an option to mitigate snow accumulations, to moderate temperatures and as a design preference.
- Appliances: There are many types of luxury appliances that would increase the cost of the home. These can include premium brands such as Wolf or Fisher & Paykel, or additional appliances such as a convection oven or wine refrigerator. If your budget is limited, you should plan where you are willing to splurge, depending on our lifestyle. Energy efficient appliances should also be a consideration in your decision making if environmental impact is a priority for you.
- Special design features: The sky is the limit here in terms of your own appetite for luxury or convenience. Need a woodshop with extra power, a sauna/steam room or a heated driveway so you don’t have to shovel in the winter? It is great to dream bu consider the price tag that will come along with your special design needs.
Step-by-Step New Home Build [Plus Contract Checklist]
Here’s a detailed new home build checklist:
- Create Budget
- Purchase Property (if not buying a combined house and land package)
- Choose a Construction Method: Custom, Semi-Custom, Collaborative or Spec House.
- Develop Plans or Designs
- Obtain Permits and Inspections
- Purchase Construction Insurance
- Begin Construction
- Final Inspection and Certificate of Occupancy
- Complete Landscaping
Start by working with your new home builder to create as detailed a construction contract as possible. The more detail this contact reveals, the more accurate your estimated new home cost will be, and the more likely you are to stay within your budget.
Frequent Asked Questions (FAQs)
Q: Is it more expensive to buy or build a home?
A: It depends. There are pros and cons to each. Either way, it’s important to consider the following factors: customization options, costs, maintenance, time, location and sustainability. If you’re looking for a high level of customization, a new build is for you. When you move into an existing home, what you see is what you get on the surface of things. Building can also be an investment that’s well worth it, and sometimes the chance for “surprise” costs are potentially higher with an existing home.
Q: What is the average price per square foot?
A: It depends. Finding a very similar existing new home in the same market, and determining price per square foot for that home can give you a sense of the cost, but the level of interior selections and upgrades will significantly impact the price of the house. You could see prices from $200 and more to $700 per square foot on very high-end homes and condos.
Q: What are the key components of a new build contract?
A: Some key components include realistic allowances, heating, if land is included in the square footage costs, liability insurance costs, and more. Please see the section on this page for a comprehensive list of contract components.
Q: How can custom plans affect the cost?
A: There can be many more unknowns if the builder has not built the house before and if choices are being made along the way. The builder is likely to build in more of a contingency, or choose a time and materials contract where they provide transparency around costs incurred, plus their management, overhead and profit.
Chinburg Properties has built a variety of custom homes to represent different lifestyles and budgets. Watch the video below to see how our process works.
For more information on estimating new home construction costs, contact Chinburg Properties. We’re happy to help you in any step on the way toward your new home build!