When the time comes to build your dream home, there’s a lot that has to be done before you can break ground. Before you can even begin planning fo the building process you’re probably asking one important question: “How much does it cost to build a custom home?”
In this article, we want to look at the overall cost of building a custom home, the important factors involved, and then get into the more specific details. This way, you can be better prepared to make the right cost decisions for you.
Average Cost of Building a Custom Home
The money you’ll need to set aside for a downpayment and construction loan varies significantly depending on what you are looking for. From tiny homes to million dollar luxury homes–there really is no set price on how much it costs to build a custom home.
It’s hard to determine the exact cost of your dream luxury home, but there are general guidelines and averages.
According to the National Association of Home Builders, the average cost of building a home in the US in 2022 was $644,750, or $252/sq ft. This included the cost of land with an average build size of 2,561 square feet.
This includes all of the costs that go into building a custom home. Where most educational articles on building a new home only discuss the cost to home builders, we find it more helpful to review all of the costs paid by you, the consumer–not just the cost of a general contractor.
Let’s examine the broad costs of building and then get into more detailed pricing.
What Factors Influence the Cost of Building a Custom Home?
As expected, there are a range of factors that influence how much it costs to build a custom home. These are the broad factors that will make the biggest difference in the overall build price.
They can be broken down into these five categories:
- Location
- Lot size and characteristics
- Home size and layout
- Quality of finishes and upgrades
- Additional features added
Let’s examine these important factors.
1. Location
Where you choose to build your house has a big impact on the overall price of your project. The state, city, and neighborhood where your lot is located all play a part in the total price of the land.
There is a wide variation between all of these factors. For example, an acre plot in rural Kuna, Idaho will cost significantly less than an acre in the Boise foothills.
The price of your lot will generally be more expensive in urban areas and the higher the demand for the location the higher the cost.
2. Lot Size and Characteristics
Besides the location, there are characteristics of the lot that will affect the cost of your custom home. Not only does the size of the lot matter, but there are other factors that make a difference.
Some of the characteristics that may alter the cost of your build are:
- Slope of the land
- Existing vegetation
- Soil consistency
- Proximity to bodies of water
- Site prep
There are also neighborhood features to consider. Lots in a cul-de-sac may be considered safer than one at the neighborhood’s entrance and fetch a premium. Lots with a more square shape may cost more than one that is narrow or oddly shaped.
Consider having a land surveyor conduct an inspection before you make a purchase so they can assess any risks that may be inherent to the lot. Doing so will prevent unexpected expenses during the build or development phase. You can also work with your builder to make sure the lot you’re considering is buildable for your team.
In the Boise area, your proximity to the river or canals is a big factor in building a house. Lots located in or near floor zones require expensive drainage solutions and alternative foundation styles to protect your home from potential water damage.
Boise also has a lot of graded or sloping lots. If you’re shopping in the foothills or even in the rural areas at the edge of the valley, you will most likely be working with an uneven lot.
3. Home Size and Layout
We already know the total square feet of your home will generally determine the cost of your house. Because your expenses are determined on a dollar per square foot basis, the bigger the home, the higher the base cost.
Although you may have a general idea of the square footage that you want for your home, some restrictions may need to be taken into account depending on the rules and regulations of your new home’s area.
Many neighborhoods have square foot size restrictions. A dense city-center may restrict how big you can build, whereas luxury communities may have minimum size and quality standards.
These factors affect the pricing of your custom build project.
Perhaps less obviously, the shape of your home plays a role in the price of your build. This generally applies to the footprint of your home. For example, a single-story home will likely have a greater cost than a two-story or tri-level home. The foundation of your home is a significant portion of your expenses, the bigger and more complex the foundation, the more your home will cost.
More complex shapes, like a rotunda or u-shaped home, also add time and difficulty to your build.
The foundation of your home is a significant portion of your expenses, the bigger and more complex the foundation, the more your home will cost.
4. Quality of Finishes and Upgrades
Another factor is the quality of finishes and upgrades. This includes selections made in the kitchen, bathrooms, flooring, and even the materials used for the roofing and walls.
In the kitchen, the major aspects that impact the bottom line include the worksurfaces, cabinetry, and the quality of appliances. For example, granite and quartz countertops are more expensive than butcher block, laminate, or composite.
For flooring, carpet, luxury vinyl, and laminate floors tend to be cheaper. Hardwood flooring and engineered wood are more durable, attractive, and desirable to buyers. However, these premiums come with a price tag that is two to three times more per square foot, which may impact your budget when furnishing an entire property.
Exterior finishes are also something to consider, luxury homes usually use pricier building materials like natural stone and premium grade windows.
In your initial conversations with the custom home builder, you can discuss the finishes you’re interested in so they can give you more information on different options and the associated costs.
5. Additional Features
Lastly, the more features added to a property, the higher the budget required. Costly additions can include features like a swimming pool, extra garage space, guest house, sports court, or outdoor kitchen.
All of these additions will add a cost to the overall construction so take these into account when planning your budget.
There are even smaller items that could be considered luxury additions carrying a heavy price tag. Water filtration systems, smart home features, heated floors, built-in appliances, are all seemingly small upgrades that increase the expense of your build.
More Info: How to get a custom home built?
Now that we know the major factors determining your price point let’s look at an expense breakdown and some national average ranges for building a custom home.
Cost Breakdown of Building a Home
Here is our more detailed breakdown of the costs.
- Land Costs
- Planning Costs
- Construction Costs
- Finishes and Upgrades
- Fees
The table below shows a summary of how much each task will add to the overall cost of your home build. These numbers are based on the costs of building an average custom home, typically three or four bedrooms, around 2,500 square feet.
Land Cost
Purchasing Land
$40,000 to $400,000
The first major cost for a custom home is the cost of the land you’ll build on.
As we discussed before, several factors affect the cost of the lot you’ll purchase for your new home. In some areas, land can cost more than $2,000,000. However, on average you can expect to pay between $40,000 and $400,000 for a residential lot.
As per research from NAHB, the average cost of a single-family lot in the US is $114,622. This includes the administration fees of buying a lot including sales commissions, closing fees, financing costs, and other expenses. In the Boise area, your average lot cost is significantly higher until you get out to Caldwell, Middleton, or Emmett.
You may choose to purchase a lot on your own, and then build. Or, you can select your lot through your home builder where the cost will be wrapped into your final mortgage.
Developing the Land
$20,000 to $60,000
In most instances, you will purchase a lot that is already developed. If your ideal location is inside a community or a parcel of existing development, you won’t have to worry about this cost.
However, large acreage or rural locations may still be considered raw land. Before your new home can be built a developer or builder will need to develop the land.
Developing the land consists of the following::
- Vegetation removal
- Leveling and grading
- Connection to electrical access
- Septic tank installation or sewage access
- Well drilling or water access
- Paving and road access
Depending on your location and house plans for the lot, you may also have an expensive permitting process. Idaho generally has lower permitting costs than states like California, but because of the influx in construction wait times for permit approval can be pretty long.
You can generally expect to pay upwards of $20,000 for land development.
Planning Costs
Hiring Experts
Before you can begin building, there are several preliminary costs to get everything in place for your new home. Engaging experts to help you with this massive endeavor is the most important part of this planning phase. You will need to find a builder or contractor, an architect, and an interior designer, each of whom will have their own costs.
These costs are separate from the costs of material and labor that go into the construction process.
Builder or Contractor
$75,000 to $150,000
Ideally, you should shop around and find the best builder in your area who can construct the type of home you want, such as Oakmont Custom Homes, a Boise custom home builder. A reputable home builder will usually have an architect and designer on staff to help simplify your process.
If your construction team, architect, and designer are all under the same umbrella all of their costs will all be part of the total purchase price of your custom home financed through the home mortgage.
Architect
$15,000-$50,000
The job of the architect, or draftsman, is to create a comprehensive set of construction documents. These include a general floor plan, ventilation, roofing, electrical and more. They will then pass those plans along to your builder who oversees the actual construction of the project.
For most residential homes, hiring a draftsman rather than an architect is a great option. While architects generally have advanced degrees, draftsmen are required to complete certification documents. Draftsmen can design and create your floor plan and construction document for a fraction of the cost of an architect.
For an architect, you can expect to pay around 10% of your total build cost, whereas a draftsman will be around 2-3%.
You can hire and pay an architect or draftsman on your own, or one may be offered to you through your builder.
Interior Designer
$5,000 to $10,000
The designer will usually work with you early on and over the course of the project to make aesthetic choices for your home.
Like the architect, a designer will usually be part of your home builder’s team but can be hired separately.
Designers will charge you by the room or by the hour. For a new construction home, designers often charge a percentage of the total construction costs. The average cost per project for a designer was $7,808 in 2022.
Permitting
$1,000 to $10,000
Once your architect has drawn up all the plans for your home, they need to be submitted for approval.
Your home builder or contractor will take your completed plans through the permitting process. They will know which permits you’ll need for your jurisdiction. Building a custom house will usually require between 6 to 10 building permits, required at different stages of the project.
The cost of building permits is usually within the region of $3,000. Idaho is slightly above average at $5,000 for a $650,000 home.
Since permitting costs are handled by your home builder, they will usually be rolled into your mortgage and paid as a fraction of your home price.
Construction Costs
Foundations
$4,000 to $30,000
Building strong, sturdy foundations is crucial when building a custom home. On average, foundations cost around $7,300 to install.
There are different types of foundations you can build, each impacting the overall cost. When planning your custom home, you’ll want to consider the additional costs of different foundation types.
The most expensive type of foundation is a basement foundation which costs within the range of $10,000 to $30,000 depending on the square footage and specifications. The cheapest foundation is a basic concrete slab, costing between $4,000-$10,000.
Framing the Structure
$10,500 to $48,000
Framing the structure of a home can be one of the most expensive tasks in the construction process. This involves erecting the entire structure of the property– including the walls, floors, and roof. It also includes the construction of load-bearing walls, interior walls, subfloors, and roof sheathing.
On average, framing a house costs $23,000. Most properties are framed using high-quality lumber. Framing is one area you might want to be aware of potential cost changes throughout your build. Over the last couple of years, we’ve seen lumber prices fluctuate significantly which affect the total cost per square foot.
Installing External Aspects
$17,500 to $35,500
Once the house has been framed, exteriors are installed. This includes roof shingles, exterior siding, windows, and external doors. This is where you’ll start to see your custom choices applied to your new home.
You can expect to pay between $5,500 and $11,500 for roofing, depending on the square foot size of the property and the type of shingle used.
Working with your designer, you’ll determine where your home will have siding, wood, or stone finishes. Those choices will affect your overall budget. The most common types of siding are vinyl, wood, metal, fiber cement, brick, stone veneer, and composite. Costs are, on average, between $6,150 and $15,900 for siding.
The cost of doors and windows also applies to this portion of your home; remember there will always be more and less expensive options that can determine where your home will fall in the price range.
Connecting Plumbing, Heating, Electrical & Other Major Systems
$22,000 to $44,000
Installing plumbing fixtures and heating systems is another high-cost task when building a custom home. Because there’s room for personalization, costs can vary significantly depending on the complexity of your home design.
Generally, you can expect to pay around $9,000 to plumb a property. Using copper pipes is standard for durability. But cheaper options are available.
For electrical, costs generally range between $4 to $9/sq ft. But the more complex your lighting system is (i.e. extra outlets, specialty wiring), the larger your electrical budget needs to be.
Your builder will also install your HVAC system at this point. Most systems are available at a cost between $7,000 and $12,500. The higher end caters to homes in hotter climates that require larger and more high-tech HVAC systems.
More Info: How long does it take to build a custom home?
Finishes and Upgrades
Interior Finishes
$18,500 to $44,000
Furnishing interiors is the most personalized part of building a custom home. Your tile, flooring, carpentry, countertops, and carpentry are all part of this cost.
The most expensive part of finishing the interior is installing drywall, which can cost between $1,500 to $10,000 per room.
Flooring will also make a big difference in your total cost. Carpet, tile, laminate, LVP, and hardwood all have their own price ranges which will be applied to the square footage used in your home.
All of your costs can vary significantly depending on the finishes you choose. This is where your designer can help you make selections that suit both your style and budget and help keep the overall home costs in your expected range.
Upgrades and Appliances
$4,000 and Up
If you wanted an ordinary, builder-grade house, you wouldn’t be building a custom home. This is where upgrades matter.
Upgrades are additional options and features that builders will integrate into your custom home for added cost. From something as small as a shelf in your kitchen ($100), to an entire system of heated floors ($37,500), upgrades are what make your home unique.
One of the common ways to upgrade your home is with your appliance selection. For example, you can opt out of having a refrigerator come with your home or install a built-in side-by-side with paneling for around $10,000.
A wider range, dual ovens, or a wine fridge are all upgraded appliances that can add thousands of dollars to your custom home cost.
Your builder may offer pre-priced upgrade packages for your selection, as well as provide you with specific quotes for the upgrades you want.
Landscaping and Adding Outdoor Finishes
$5,000 to $40,000
Concrete is a large portion of this price. Although there are other material options, you will generally need concrete for your driveway and patios, as well as additional features like a pool or sport court,
Driveways typically cost between $2,300 to $7,500. But prices can be significantly higher for more complex designs or special features.
Your lawn, trees, shrubbery, garden, and other outdoor additions to your property are also part of this cost. Basic landscaping costs around $2,500, while bigger projects range between $10,000 to $30,000.
You can usually work with your builder to have some of these costs bundled into your mortgage price. However, you may need to plan on some projects being completed separately after your build is finished.
Builder Costs
$40,000 to $100,000
Just like any other business, your home builder will have their own fees associated with constructing your home. Those additional costs are worked into your home price.
If we take the average home price per the NAHB of $644,750, those fees incurred by the builder would break down like this:
- Financing Cost – $12,192
- Overhead and General Expenses – $32,979
- Marketing Cost – $4,268
- Sales Commission – $23,080
On top of recouping these costs through the pricing, the builder will also look to make a profit. The profit range for a custom home builder is generally going to depend on the economic climate and the surrounding housing market. If you’re looking to build a house in an area with high levels of home inventory and moderate prices, your builder will charge lower prices.
In 2022, when this data was captured, home builder profits were higher than average due to the exploding housing market and record-breaking home sales. The recorded builder’s profit from NAHB was $65,369.
Remember, the average price of your new home will always be highly associated with the general cost of homes being sold. Profits, prices, and fees will all fluctuate with market demand.
Idaho, and particularly the Boise area, is still experiencing significant population growth that puts pressure on the real estate market. Custom homes in particular are subject to this pressure as new Idaho residents build their dream homes on the beautiful large parcels found around Meridian, Eagle, and Boise.
If you are building an Idaho custom home, look for a home builder offering you a great suite of standard features, customization options, and a small enough slate of projects that you are their priority. Oakmont homes offers full customization, great customer service, and a flexible team devoted to helping you build the Idaho home of your dreams.
The Dream of Building Custom
Building a custom home is all about personalization. For most people, building a house is a life-long dream. It’s an opportunity to design your forever home and make it a space you want to live in long-term.
It can be a fun experience for homeowners, and nothing beats having a home that fits your family and your style when you finish.
And while the costs of building a custom home can vary significantly, but you can generally expect to pay around $644,740 to build an average-sized property (including the lot cost).
Now that you know more about all the factors and costs associated with building a custom home, you’re one step closer to achieving that dream.
About Oakmont
Oakmont Custom Homes is Boise, Idaho’s preferred luxury home builder. Located in Meridian, Idaho, Oakmont serves clients across the Treasure Valley and in other nearby locations like McCall, Tamarack, Cascade, Emmett, and other locations.
Our focus on quality doesn’t mean we are unaffordable. Many of our homes range between 2,200 and 2,800 square foot.
Learn more about Oakmont Homes or contact us here.
