The Complete Guide to Construction Costs
We receive dozens of emails asking about construction costs for a new home each week. The problem is there are so many variables involved in the new construction equation that there is no simple answer to what an average cost will be. Factors such as size, location, foundation type, personal upgrades, or higher-end finishes can quickly increase your all in cost of building a new house.
At DEN we have invested heavily in being able to provide relevant cost estimates for all of our builds and house plans, using Gordian as our source of truth for current national pricing, build costs, and home prices. Gordian bases their dataset on 30,000 hours of annual research and verifying costs for materials, labor, and equipment across their member network. This is the level of research and consideration that we feel is necessary to help our community better understand their own costs for a new build.
DEN’s Construction Cost Estimator
You can use DEN’s Construction Cost Calculator as an additional reference point for budgeting out your own build.
As a result of Gordian data services, we provide a cost estimation for all of our designs that can help you understand a good baseline to begin your research with. Based on the latest construction industry data, which is subject to change at any moment, we suggest using a national average of $244.50 per square foot for budgeting purposes. Therefore your total cost for a 168 square foot cabin will be approximately $41,076 when using a general contractor to handle the skilled work.
We encourage our customers to understand that this number is so variable, depending on where you’re building, that it should really only be used as a reference point. Like we mentioned above, there’s no one source of truth that can tell you exactly how much your build will cost with any level of certainty, until you’ve finished the build itself.
You can also tour a recent client's A-frame cabin project while he shows you the finished results and explains some of the cost of construction and design choices that he chose.
Understanding Construction Costs
The best place to start is to understand what types of costs or are included when building a house. According to the NewHomeSource website, construction costs for tiny houses and homes fall into one of three categories.
Administration Costs include jurisdictional or agency fees for construction permits, plan checks, and building inspections. However, if you hire outside professionals such as a realtor, architect, or designer, those fees are typically not included when calculating your cabin construction costs with a builder or contractor.
Material Costs are a crucial component in the construction cost equation. However, their prices vary immensely due to quality, performance, longevity, and even local availability.
Pressure-treated lumber always costs more than untreated lumber
Metal roofing always cost more than asphalt shingles
Cement board siding is more expensive than wood siding
Many building material suppliers are dealing with material shortages as the manufacturing sector races to replenish supply house inventories around the globe.
Labor Costs are the other major factor when determining your A-frame cabin construction costs. Less volatile than material prices, labor rates vary depending on their own set of sub-factors such as project size, location, and the project's completion schedule.
You'll probably see terms such as builder's standard when talking about construction costs, but what does that mean? It refers to good quality products and finishes that pass the minimum code requirements of the local building department. If you compare good, better, and best options, Builder's Standard meets the good criteria.
Cabin construction costs typically don't include several items such as:
Property or land purchase costs
Earthwork for well, septic, or utility connections
FFE items (furniture, fixtures, and equipment)
High-end design or interior finish upgrades and exterior finish upgrades
Off-grid living systems
Additional add-ons and additional costs
House Per Square Foot Costs
Do a Google search for home construction costs and you'll see results like "Our company can build an average sized home, on a basically level lot, with standard finishes and amenities, for $XXX to $XXX per square foot."
Ideally, after you multiply your home square footage by both the low and the high numbers, you should know the overall cost range needed for your specific project. But unfortunately, these types of formulas don't work as well as you might think.
Before you start punching numbers in your calculator app, let's take another look at the critical components of that average price budget formula again. Let’s take a closer look at those terms mentioned above: Average sized home, basically level lot, and standard finishes and amenities.
You might be wondering, just like we are, what is the square footage of an average-sized home? Well, for example, at DEN we offer plans that range from < 200 up to 2,000 square feet and beyond. Our answer to the "average-sized home" question wouldn’t necessarily be an average of those two numbers, but rather would probably be the floorplan we sell the most. The chances are that most other builders and vendors would follow a similar logic to answer this question. Ask three different vendors about average-sized homes, and you'll most likely get three completely different answers.
As the consumer doing your construction cost research, it might seem like you’re comparing apples to apples but until you know the company's unique definition for the term, you're really comparing apples to oranges.
We performed a quick search "average size home in [location]" to help demonstrate how much gray is involved with the term "average" anything:
• The average size home in California is 1,625 square feet
• The average size home in Montana is 2,040 square feet
• The average size home in Hawaii is 1,308 square feet
• The average size home in Washington is 1,903 square feet
• The average size home in Florida is 1,694 square feet
Based on location alone, the average size home includes a 700 square foot variable to consider when calculating a range for your costs.
Basically Level Lot
Our biggest issue with this term is that it is 100% subjective, depending on who's assessing the property. As a potential buyer viewing a property, basically level might perfectly describe what you're seeing. That is, until the excavator arrives and informs you that the lot must be re-graded to properly drain water away from the location where you plan to build.
Other soil issues that impact your construction costs include the soil density and make-up. For example, if you're planning to install a septic system, you'll want loamy soil composed of sand, silt, and some clay for the drain field area. Bedrock just below the topsoil is problematic for installing a septic system and running utility service lines underground.
The last factor of the basically level lot scenario involves the soil's permeability. During the winter season, more porous soil can experience frost heaving, caused by ice forming within the soil particles and expanding upward. Frost heaving can easily damage underground services, concrete slab foundations, and foundation piers. As you can see, what appears to be a "basically level lot" can quickly escalate your excavation and site-prep activities and costs.
Standard Finishes and Amenities
Another highly subjective term, and without some background context, really doesn't provide any helpful information for the consumer. Standard is a synonym for average, usual, and typical, so my list of standard cabin amenities could include 3 bedrooms and 2 bathrooms. Your standard amenities might consist of a bathroom for every bedroom, plus a formal dining room. Of course, the contractor has their definition of standard amenities, possibly based on personal taste, completed projects, or something else entirely.
When considering construction costs, it doesn’t quite make sense that finishes get lumped in with amenities. So let's step into the kitchen for a moment to discuss a few of the finish options available there. Let’s take cabinetry for example.
Kitchen cabinet choices usually fall into three categories:
Stock cabinets are standard-sized prefab units assembled to fit the kitchen space and run from $60 to $200 per linear foot.
Semi-custom cabinets allow for some customer customization and require a longer lead time to accommodate the extra work. As a result, you can expect this finish to cost from $100 to $650 per linear foot.
Custom cabinets are usually hand-made to the customer's specific sizes and requirements. Custom cabinets can range from $500 to $1,200 (and higher) per linear foot.
Your 30' length of kitchen cabinets could run from $6,000 to $36,000 based on the option chosen. So, what exactly is deemed as "standard" in the quote formula referenced above?
You can repeat this process with different finish options such as lighting, countertops, flooring, and even your doors and windows. You quickly get the idea how wide this range could be.
Construction Costs Misinformation and Where to Go from Here
As a team at DEN we have spent hours deep-diving through the latest data and stats, and here's the readily available information on the web we found when picking three states at random.
• The cost to build a cabin in Michigan ranges from $90-$150 per square foot
• The cost to build a cabin in Florida ranges from $141-$206 per square foot
• The cost to build a home in California ranges from $119-$357 per square foot
Just like the pages linked above, the Census Bureau provides highly accurate data but it's rarely. So, Census data is currently two years behind today's actual market costs. With these pages as examples, you can see that some sites keep their costs updated, but others don’t.
Most consumers don't realize how drastically material and labor costs have gone up recently, even during the pandemic alone. For decades, supply houses provided contractors with an annual price list to prepare their bids. Today, a contractor must check his material prices daily or weekly and request a project quote to lock in today's price for your project next month.
According to the National Association of Homebuilders; Over the past four months, lumber prices have nearly tripled, causing the cost of an average new single-family home to increase by more than $18,600 (according to NAHB pricing models). This lumber price hike has also added nearly $7,300 to the market value of the average new multifamily home.
As a result, the construction industry is moving to RSMeans data systems, like Gordian, for the latest construction data for bidding and procurement purposes. On November 2, 2021, Gordian reported, "In the past 12 months, more than 93% of all material costs, equipment prices, and labor wage rates have experienced a change. Increases have occurred in 71% of equipment prices and 98% of labor wages. 71% of construction material costs have increased, some specific prices rising greater than 50% over 2021 prices and continuing to fluctuate dramatically from quarter to quarter.”