Home Construction Cost

What is my home construction cost going to be?  That’s always one of the first things on your mind as a homeowner when you’re starting out on the journey of building or remodeling your home.

On this page we’ll take a look at how you can work out your new build construction cost and take a look at some of the drivers of home construction cost.

home construction costs

How to work out home construction cost

The place to start for a ballpark estimate of how much it will cost to build your home is with a cost per square foot.

As your design develops, you’ll get a more accurate idea of your home construction cost until you get your final estimate when you go through the bidding process.

Finding out how much your project is going to cost is only one aspect of working with your budget throughout the duration of your project.

What drives home construction cost?

Let’s have a look at a few of the drivers of home construction cost.  As a homeowner it’s easy to think that you’re very much at the mercy of the home building industry, however while some of these cost drivers are more or less out of your control, there are others you have lots of control over.

Drivers of home construction cost which are out of your control

It’s no secret that project costs vary depending on the state of the economy.  If the economy is good and people have the confidence to put money into their homes this makes contractors busy, so contractors can charge more (within reason) and pick and choose the jobs they do.  It’s the age-old rule of supply and demand at work.

As an individual homeowner, you don’t have any control over the economy.  You might have some control over the timing of your project, but to take advantage of a downward economic cycle could take years.

Most homeowners want to get going and in my opinion that’s what you should do.  You may not be able to afford to build quite as much space, but with smart design the likelihood is you’ll be able to satisfy most of your desires and requirements.

Cost of labor

Closely related to the economy is the cost of labor.  If there are lots of brick layers, laborers and other trades people looking for work, employers can negotiate wages down and vice versa if the industry is on fire and there's a shortage of labor.

Cost of materials

Another factor linked with the general economic climate is the price of building materials.  A busy construction industry means that there is a high demand and limited supply of materials which pushes the prices up.

If there’s any other reason (maybe geographic, maybe political) which causes a shortage of materials this will have the same effect of putting the price up.
Another thing to consider is fluctuating exchange rates if you are bringing in materials from overseas.

Drivers of home construction cost under your control

So, the good news is, there are lots of things that are under your control when it comes to home construction cost.  Let’s look at the key “cost control variables”.

Your location

Home construction costs are different in different locations around the country.  Believe it or not, it can cost nearly double to build in New York as it does in Phoenix.
If you have a choice about your location, your may want to factor building cost into your criteria.

The weather can be very different in different locations.  If weather is likely to cause delays and make your project last longer, it will cost more.


This is by far the most important variable for your home construction cost.  Build less and it will cost less through using less materials and less time to build.  It’s not a hard concept, but it’s all too easy to add space to your plans without thinking very carefully about how you’ll use it. 


What you're planning to build

There will be many design possibilities and combinations which would achieve everything in your design brief.

It’s important to work with your design team to understand the cost impact of the design decisions that all work together to create your home design.

The more complex your design in shape and details, the more time it will take to build.  This extra time will make it more expensive to build.

The way you’re planning to distribute your space also plays a part.  A 2,000 sqft home built over two equal stories will be less expensive to build than a 2,000 sqft one story home.  With two stories you get more space for the same amount of groundwork, foundation and roof.

You can read more about home building on a budget which explains more about how clever design can save you money.

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Good to know

A larger home in a simple shape may be less expensive to build that a smaller home with a complex shape.

Your site

If you have already bought your land, then I suppose these factors regarding your site are beyond your control.  If you haven’t yet bought your site, then take these points into consideration as you look for your site.

There are several things about your site that can affect your home construction cost.

  • Is your site easy to get to?  Contractors will charge more if they have a long commute.
  • What’s the topography of your site like?  What I essentially mean by this is how flat or sloping your site is.  A flat site will be easy to work on and the foundation can likely be simple and will be easy (and therefore less expensive) to lay.  The opposite is true for a steep site.
  • What’s your soil like?  Some soils are easy to work with and hold a slab on grade foundation.  Other soils may contain rocks which need to be removed or require a complex foundation.
  • How accessible is your site?  Will it be easy for your contractors and their machinery and supplies to get on to your site, and be stored at your site?  A roomy and accessible site means that your contractor has less headaches with comings and goings and storage whereas they’ll need to charge for coordinating machinery and supplies more diligently on a less accessible site.
  • Are utilities easily accessible?  Establishing utilities near your construction site will cost money if they’re not already in place.

There are naturally other factors about your site which can effect costs, but these are the key factors.

figure out your home construction cost

Other considerations for home construction cost

There are some other facets of project cost that it’s important to keep in mind when you’re thinking of your budget.

Cost of maintenance and upkeep

When you’re making design decisions, consider the impact on the cost of running your home, the cost of maintenance and upkeep as well as the initial cost to install.

Personal cost

Building a home takes time and energy and involves a certain amount of stress.

Cost of contractor's margin

Your contractor’s bill is made up of materials + labor + overhead + profit margin so if you find ways of reducing the cost of the labor and materials in your project and making it simpler to build you’ll reduce the cost of overhead and the amount of profit as well – savings that build on your savings. 

More construction costs...

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