Everyone knows housing is not exactly cheap. For many people, the decision to build a new home is one of the most significant financial decisions they’ll make in their lives. Building a new home from the ground up gives you freedom and the ability to customize your dream home to your exact specifications, but it comes with a pretty major price tag.
Recently, the National Association of Home Builders shared findings from a survey involving 4,000 homebuilders. This study detailed the specific costs associated with various stages of constructing a new home in 2024. Construction-related expenses accounted for approximately 64% of the total cost of a newly constructed home, which averaged around $428,215 per unit. The remaining portion of the sale price covers overheads, general expenditures, as well as additional financial factors such as funding, advertising fees, and real estate commissions.
So, what does the figure of $428,215 encompass? In this section, we will dissect the typical costs associated with constructing a home by breaking down each element. We'll explore the key phases involved in new construction and understand how these components collectively add up to the total expense of building a house.
Site Work
Before a house exists, there must first be a plot of land. In 2024, work on these sites averaged out to contribute $32,719 The expense associated with constructing a new house includes various aspects involved in readying a location for residential development. This encompasses expenses related to engineering and architectural services along with obtaining necessary building permits. The preparation phase does not conclude once actual construction begins; additional inspections are needed at different stages during the building process. Nonetheless, this preparatory stage constitutes only a modest portion of total expenditures, accounting for approximately 7.6 percent of all costs tied to new home construction.
Foundation and Framing
The foundation and framing provide the structure’s skeleton and groundwork; thus, ensuring their accuracy is crucial. According to the NAHB, the typical expense for framing a house amounts to approximately $10,534 on average. $70,982 In 2024, foundations became more budget-friendly, with costs typically amounting to an average. $44,748 According to the new house data, combining the costs for laying the foundation and constructing the framework accounted for more than 25% of the overall expense in building a new home.
Major System Rough-Ins
Certainly, a dwelling goes beyond merely a cement foundation and timber structure. Any contemporary residence necessitates three primary systems: plumbing, electricity, and HVAC. In 2024, each of these systems has approximately similar costs, typically amounting to roughly $27,ooo Together, the upfront expenses for setting up these systems were $82,319 —and that doesn’t include any appliances or fixtures.
Interior and Exterior Finishes
So, you have a house complete with a foundation, structure, and all essential systems... Now comes the part where you wrap up everything. In 2024, finishing the exterior turned out to be relatively budget-friendly during new home construction, typically costing around $57,510 For projects involving external wall materials and the fitting of windows and doors.
The interior finishes turned out to be the priciest segment in the study. This is logical since numerous elements of building construction belong to the "interior finishes" classification. Items such as insulation, drywall, paint, cabinetry, appliances, among others, collectively contributed to an average expense figure. $103,391. That amounts to roughly a quarter of the total expense for constructing a new house, with this amount being allocated to a single phase of the build process. The cabinets turned out to be the priciest component of the internal finishing, costing around $20,000 per new home.
Last Phases ofConstruction and "Additional" Costs
Following all those stages, we reach the last phases of building. It’s essentially about adding the finishing details which include tasks such as laying down the driveway, constructing porches and patios, along with overall clean-up at the location. Fortunately, this phase turned out to be the most cost-effective part on an average basis, amounting to $27,710 Per new home. The NAHB additionally added a concluding "Other" category in the survey that encompassed $8,835 In expenses that couldn't be directly linked to the other categories.
Total Sales Price Breakdown
So that’s where the $428,215 In new home constructions, the expenses originate from various factors. However, this accounts for roughly only sixty-seven percent of the overall sale price. When additional economic aspects such as financing, advertising, and an eleven percent gain for the constructing firm are factored in, the typical complete sale value of a freshly built house in 2024 amounted to $665,298 If you're planning to construct a house from scratch, ensure you account for all the expenses involved before embarking on your dream of building your ideal home.
Source:
NAHB, “ Expense of Building a House - 2024 ” (2024)
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