Building a new home cost
Many people who want to construct a new home often wonder exactly how much a new home costs to build or 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 to help give you a framework for better estimating your new home construction cost:
How to Help Estimate New Home Construction Costs
1. Know Your Floor Plans and Your Builder
Start by selecting a floor plan completed by or adjusted by a local architect. The right 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.
Then contact 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 would like to construct. The suitable builder for your project is hugely important in maintaining proper execution, timeline, and budget for your build. This builder should tell you how much per square foot they traditionally charge for a new home construction project similar to yours, and at the same time, the builder 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 then ask what exactly this new home cost includes.
2. Get an Idea of What Your New Construction Costs Per Square Foot
Arriving at an exact figure for new home costs per square foot is not always realistic, but getting a ballpark idea should not be too difficult. To do this, take the total cost of your project, as outlined by your builder, and divide this number by the total number of square feet in your project. In other words, if your build is to be 2, 000 square feet, and your builder estimated that it would cost $300, 000 to build, then your cost per square foot is 300, 000/2, 000, or $150.
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 or not the estimate your builder has provided is competitive and reasonable.
3. Know What Style, Quality, and Features Refer to in Relation to Estimating Your New Construction Costs
It’s not all about 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 to build. The same is true for a two-story versus a one-story home with the same square footage because a one-story home will require a larger roof and foundation. 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 price you will incur.
Quality refers to the actual materials used for building. This can include a myriad of choices, for example, flooring, paint, insulation, shingles, cabinetry and built-ins, appliances, and doors and windows. The higher quality you choose, the more cost you will incur.
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.
4. Leave Room in Your Budget to Accommodate the Additional Construction Costs
When estimating a new home construction cost, don’t forget to factor in some common expenses that can be overlooked in the excitement of a new home build. These include:
- Site Preparation – A flat lot is ideal to build on, but if you have to clear trees, haul in dirt, grade, or remove large rocks, expenses will increase.
- Permit Fees – Local building codes, zoning laws, and restrictions may mean permits need to be obtained for work related to sewers, electricity, occupancy, etc. Depending on the area, these permits can be pricey.
- Time of Year – When your build is scheduled can contribute to your cost. If labor is in demand, estimates are typically lower to remain competitive, but if you choose to build at an off time (or a more inconvenient time, i.e., New England winter), the cost can often be higher.
5. 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, you can work to avoid this outcome. For some, it can be too easy to get carried away with and fall in love with a higher-end flooring material, or vaulted ceilings, or more elaborate landscaping, and so on – but every time this happens, the price increases.
You are best ready to combat price overruns 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 home cost will be, and the more likely you are to maintain your budget. Some key components to identify in your contract might include:
- How a garage or basement is might be included / handled in the contract
- 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 material costs
- Inflation for a delayed build
In the end, it is never a bad idea to allow an additional 10% to cover unexpected costs, but the right new home builder should be able to help you maintain budget. You can also always work backwards to keep within your budget too – 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.