How Much Does it Cost to Build a Custom Home?

by S. Herlihy ; Updated July 27, 2017
A man carries lumber in the frame of a house.

Creating a custom home, while the achievement of a lifelong dream, can be more costly than buying an existing home. Be prepared for the costs you will encounter during the building process, including permits and architectural fees.

Land Purchase

A custom home can be wedged into a small lot or located on several acres. Examine the land closely before you buy it. Make sure flooding and other environmental threats do not pose a problem. Obtain a land survey report. You can also purchase a lot with a pre-existing house, move the house to a different location or just tear down the house and build your own.

A small lot in a rural area may cost as little as $2,000 an acre. A building lot in a city or suburban area may run 10 or even 100 times as much.

Housing Plans

Home construction begins with a home design. You typically can purchase ready-made plans for less than $1,000. You can also work with an architect to design your own house plans. Architectural fees start at about $25 per hour. Some architects will work with you to modify an existing house plan.

Utilities

If the lot you have chosen does not have utilities in place, you will need to have them constructed. You’ll need a septic tank or a hookup to an existing sewer system, a water source and electricity hookups. Costs for this vary by location. A rural area may have fewer options and cost more. Cities often have economies of scale, decreasing costs. Expect to pay between $5,000 and $50,000 for this service.

Permits

Before you can begin construction, you’ll need permits from local government. The permits will ensure that your house meet safety codes, such as those designed to withstand fire, earthquakes and hurricanes. Visit your local government office to find learn details and pick up the necessary permits. Expect to pay from $2,000 to more than $10,000 to meet requirements.

Materials

Custom home construction requires the purchase of building materials such as lumber, brick, mortar, granite, siding and concrete. The cost of materials can vary greatly depending on location and the size of the house. A home that incorporates high-end materials such as tumbled marble and slate roofing may run upwards of $500,000 for materials. Homes that use slightly lower quality materials, such as aluminum siding, may still run above $100,000 for a 2,000-square-foot house.

Labor Costs

Most people cannot build homes by themselves. To do that you’ll need to hire a general contractor, who can hire skilled laborers such as plumbers to install piping and less skilled laborers to do simpler jobs such as carpet installation. Labor costs vary. A builder may charge by the square foot, by the hour or a percentage of the total costs on the house. Labor costs from $20,000 to $50,000 for an entire house are not uncommon.

Total Costs

A custom home can cost as little as $100,000 to $200,000. A home filled with top-of-the-line appliances, custom-designed built-ins, upscale materials and extensive landscaping in a gated community can run several million dollars.

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