When building a new home, budget is an important consideration.  Homeowners want assurance that the builder they hire is cost-conscious and will not over-charge to construct their house.  Because of this, potential clients often ask how much builders charge per square foot to build a custom home.  Although this seems like a simple question, it is actually quite complicated.  In an effort to be honest and transparent with our clients, we can provide an estimated range of cost per square foot.  It is impossible to quote an exact price per square foot of a custom home that has never been built before, however.  This is because size and features affect price per square foot dramatically.

Size and Features Affect Price: A Comparison of Two Houses

To better explain what I mean by “size and features affect price per square foot,” let’s compare two example houses. Minimizing some variables which can affect price, let’s assume the homes are located in the same market area.  Also, they were built at the same time using the same set of suppliers and contractors, so labor and material costs are the same.  Finally, the same building company was used, so the management systems were the same.  The differences between these two homes include size, floor plan layout, and lot.

Our Comparison Houses

Let’s look at a few specifics of our comparison houses…

House #1

  • 3,304 square feet of conditioned living space
  • 3 car garage
  • 4 bedrooms
  • 3 1/2 baths

House #2

  • 3,670 square feet of conditioned living space
  • 3 car garage
  • 4 bedrooms
  • 3 1/2 baths

A Line-Item Cost Analysis

Now, let’s take a look at a simplified line-item cost analysis of these two homes.  To keep this analysis readable and straight-forward, I combined many individual items together, using the ones most relevant to our discussion.  (In other words, there are many items not included below.  Our actual bid contains hundreds of line items.)

Although this is only an example, it is not hypothetical.  These numbers are based on factual data informed by previous projects that we have built.  That being said, let’s look at the line-item cost analysis…

House #1 (3,304 sq ft)House #2 (3,670 sq ft)
Structure$187,113$197,519
Mechanicals$55,706$57,803
Trim, Cabinets, Paint$71,274$65,042
Countertops, Flooring$28,280$30,938
Land Development$40,275$22,864

Cost per Square Foot Analysis

Next, let’s look at the cost per square foot of each of the above items.  In other words, let’s calculate the amount that each item contributed to the cost per square foot.

House #1 (3,304 sq ft)House #2 (3,670 sq ft)
Structure$56.63$53.82
Mechanicals$16.86$15.75
Trim, Cabinets, Paint$21.57$17.72
Countertops, Flooring$8.56$8.43
Land Development$12.19$6.23

As you can see, everything cost more per square foot in House #1 (the smaller house) than in the larger House #2.  This information shows us an important fact:

  • As the size of the house increases, the price per square foot decreases.  (This rule applies for houses of comparable quality and finish levels.)

When looking at over-all costs, however, notice that House #1 (the smaller house) actually spent more on trim, cabinets, and paint than the larger House #2.  This information demonstrates a very important fact:

  • Because the homeowner is in control of these selections, they are also in control of how much is spent on these materials.

Land Development Affect on Price

Finally, we need to discuss the “land development” line item.  Notice that the land development for House #1 cost nearly twice as much as it did for House #2.  This is because land development costs are completely unrelated to the size of the house.  Whatever it costs to prep the land–dirt work, well, septic system, hauling off trees and/or debris, etc.–is what it costs.  Although land development costs will show up as a number in the cost per square foot calculation, it is actually irrelevant as a comparison between two houses.  (For more information, read our “How to Find & Buy Land for Your Dream Home” Series here.)

How much does it cost per square foot to build a custom home?

So, back to the initial question…  How much does it cost per square foot to build a custom home?  Well, as this example shows, this is a very difficult question to answer.  Plus, price per square foot does not really give homeowners the information they are seeking.  If you truly want to find a cost-conscious builder who will not over-charge to construct your house, then you need a builder who is willing to give a detailed bid/estimate for your specific floor plan.  There are simply too many factors involved to give a true price per square foot estimate of the cost to build a house.  In other words, as stated previously, size and features affect price per square foot dramatically.

More Information & Resources

For more information, click the links below.  And please, contact us with any questions, including how size and features affect price.

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Summary
The Cost to Build a House: How Size and Features Affect Price per Square Foot
Article Name
The Cost to Build a House: How Size and Features Affect Price per Square Foot
Description
An article comparing two homes, analyzing a simplified line-item analysis to demonstrate how size and features affect price per square foot.
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Publisher Name
Elements Design Build L.L.C.
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