Construction Pricing Trends, Modern Realities,
and How Home Builders Can Navigate Them

When you’re planning to build your own home, understanding how much it’s going to cost you should be among your top priorities. It can be fun to think about everything you want to put in your dream home, but sticking to a realistic budget is important not only for yourself, but for the confidence of your lender. Although the cost of building a house can rise and fall on a year-by-year basis and based on specific circumstances, you can generally count on it rising on average as time passes.

Data from Statista shows that in the last two decades alone, the price per square foot of a new single-family house in the US more than doubled from $75.68 to $168.35. The most significant jumps in price occurred in 2021 and 2022, both incurring more than $20 rises over the past year. Increasing land, labor, and material costs can account for much of the upward trend in the price per square foot of constructing a house. While these are generally expected conditions in the market, Quickdraw Fund Control shows that recent years have seen shocks that have increased pricing significantly, like supply chain disruptions (leading to historically high prices for construction materials), labor shortages, high interest rates, and significant inflation.

Brian Freeman points out a number of other individual factors that can affect your cost per square foot in building a house. Chief among them are the size of the lot, the usage of the space, and the quality of the finish. To illustrate what that means, think about two houses. One of these houses is 500 square feet smaller than the other, but both of the houses are built with the same number of kitchens, bathrooms (the most expensive square footage to build), and amenities, as well as the same quality and type of finishes. The smaller house is going to cost more per square foot than the larger one, because the costs are distributed over a smaller space. And generally, houses with more bathrooms, more amenities, and more expensive finishes will cost more than those with fewer bathrooms, fewer amenities, and more affordable finishes.

Another aspect that affects pricing for the homeowner is geographic location. For example, a house built in a central urban area will almost certainly cost a lot more than the same exact house built in a less dense rural area. In Wisconsin specifically, the current price to build a home range (on average) between $80 and $400 per square foot, with most people paying between $155 and $255 per square foot, according to Fixr.

When creating their budget, prospective home builders should take into account economic, geographic, and individual considerations affecting their price per square foot. Although you can always find ways to budget smartly and cut costs when building a house, you may also want to look at broader conditions and trends to understand when the perfect time to build your dream home will come. Your lender can help guide you in the decision making by providing you with all the information and financing options you will need along the way.

“2022, The Second Half — Will Construction Costs Continue to Rise?” [Article]. Quickdraw Fund Control. https://quickdrawfundcontrol.com/2022-the-second-half-will-construction-costs-continue-to-rise/ [Accessed 16 January, 2024]

“Average price per square foot of floor space in new single-family homes in the United States from 2000 to 2022 (in U.S. dollars)” [Webpage]. Statista. https://www.statista.com/statistics/682549/average-price-per-square-foot-in-new-single-family-houses-usa/ [Accessed 16 January, 2024]

“How much does it cost to build a house in Wisconsin?” [Article]. Fixr. https://www.fixr.com/costs/build-house-wisconsin [Accessed 16 January, 2024]

Freeman, Brian (16 Mar, 2022). “What Affects the Price Per Square Foot to Build a Custom Home?” [Article]. Freeman’s Construction Inc. https://freemansconstruction.com/what-affects-the-price-per-square-foot-to-build-a-custom-home/ [Accessed 16 January, 2024]