Cost for Constructing a Residential Property
Building a new home is an exciting venture, but it can also be a costly one. According to the National Association of Home Builders (NAHB), the typical construction cost of a new single-family home in the US ranges between $150,000 and $300,000 for a 1500 square feet apartment. Here's a breakdown of the costs involved in building a house in the US.
Material Costs
Material costs cover all building materials such as lumber, steel, concrete, drywall, insulation, and appliances. Material prices have risen sharply in recent years due to supply chain issues, tariffs, and energy costs. For example, lumber prices have increased to around $500–$600 per 1000 board feet compared to less than $300 before the pandemic.
Labor Costs
Wages for skilled construction workers, subcontractors, and project management personnel constitute a significant portion of the budget. Labor shortages have contributed to rising labor expenses recently.
Equipment Costs
Expenses related to purchasing or renting construction equipment used throughout the build are also included in the total cost.
Overhead Costs
Overhead costs include insurance, permits, site security, regulatory compliance, and other administrative fees not directly associated with physical construction.
The Seven Stages of Building a House
The cost to build a house in the US can be broken down into seven basic stages:
- Site work: Site work costs about $18,823, which is 6.2% of the total cost of building a house. This includes building permit fees, impact fees, sewer/water fees, inspection, architecture, and engineering.
- Foundation: The foundation stage includes excavating, building a foundation, retaining walls, concrete, and backfill for a house. The cost of the foundation is about $34,850, which is about 11.8% of the total expenses of building a house.
- Framing: Framing includes sheathing, trusses, and sometimes roofing. The cost of framing is up to $51,589, which is 17.4% of the total cost of building an apartment. Accuracy, efficiency, and strength are required for framing, making it necessary to hire a professional.
- Major systems installation: The major systems installation phase involves plumbing, HVAC, and electrical work. This stage can cost up to $43,668 or more, equivalent to about 14.7% of the project's total cost.
- Interior finishes: The interior finishes stage, involving drywall, insulation, painting, interior trims, lighting, cabinetry, appliances, flooring, countertops, plumbing fixtures, fireplace, and more, can cost up to $75,259, or 25.4% of the total expense. This stage often costs the most in the building of a house.
- Exterior finishes: Exterior finishes, including wall finishes, roofing, windows, doors, and garage doors, can cost around $41,690, which is 14.1% of the total cost of building a house in the US.
- Final steps: The final steps of building a house, such as landscaping, driveways, and outdoor structures like a patio or deck, can cost about $20,116, which is about 6.8% of the project's total cost. The cost of the final steps can vary depending on whether they are completed in the middle of the project or saved for last.
Cost Variations
The total cost of building a house in the US can vary significantly based on personal preferences and budget. For example, a four-bedroom house can cost anywhere between $200,000 and $1,000,000. Several choices can be made to lower the estimated cost of building a house in the US, while some choices can increase the estimated cost substantially.
Additional cost pressures such as new energy efficiency regulations and tariffs on imported construction materials add thousands of dollars to typical builds, complicating accurate pricing for builders. The typical cost to build averages about $195 per square foot nationwide when including contractor fees.
In summary, building costs break down mainly into materials, labor, equipment, and overhead, with materials and labor being the largest and most volatile components according to the National Association of Home Builders. Rising prices in these categories have caused a roughly 40% increase in construction costs since 2018.
Investing in real estate, particularly building a new home, can be a significant part of one's lifestyle when it comes to finance. The cost of materials for constructing a house, such as lumber, labors for skilled construction workers, and equipment rentals, contribute largely to the overall expenses, with material prices being especially volatile due to factors like supply chain issues and energy costs. On the other hand, home-and-garden enthusiasts might also consider investing in landscaping, driveways, and outdoor structures as part of their final home improvements.
