Looking at single-family homes started in 2016, the median prices per square foot, excluding improved lot values, range from $164 for contractor-built homes in the Pacific division to $81 for speculatively built homes in the East South Central division.
At $164 per square foot, new contractor-built single-family homes in Pacific are the most expensive to build exceeding the national average of $101 per square foot by more than 60%. Per square foot costs exclude the cost of developed lot, so highly variant land values cannot explain the regional differences in per square foot costs. However, higher and rising regulatory costs undoubtedly contribute to higher per square foot costs.
New England with the median contract price of $147 per square foot is second on the list of most expensive contract prices per square foot. In 2016, New England also became home to the most expensive spec houses with the median sale price of $150 per square foot, excluding improved lot values.The most economical custom homes are started in the South region, where the median contract prices per square foot range from $88 in the West South Central division to $90 in the South Atlantic and $91 in the East South Central, consistently below the national median contract price of $101 per square foot.
Custom, or contractor-built, homes are built on owner’s land (with either the owner or a contractor acting as a general contractor). Consequently, contract prices of new contractor-built homes do not include value of improved lot and, typically, are lower than sale prices of spec, or built for sale, homes. To make comparison more meaningful, the cost of lot development is excluded from sale prices of speculatively built homes.
Looking at the spec starts and excluding improved lot values, nevertheless, reveals a similar geographic pattern. The highest per square foot median sale prices are registered in New England ($150) and Pacific Divisions ($138). The lowest median prices are in the southern divisions, ranging from $81 in the East South Central division to $89 in the West South Central division and $91 in the South Atlantic. Once again, these divisions stand out for registering prices below the national median – $105 per square foot for spec homes.
Typically, contractor-built custom homes are more expensive per square foot than spec homes after excluding improved lot values, suggesting that new custom home buyers are not only willing to wait longer to move into a new home but also pay extra for more expensive features and materials.
The clear exception is the Middle Atlantic division where half of spec homes have per square foot costs in excess of $131 while the median for contractor-built homes is $120. In New England, the median sale price also exceeds the median contract price, $150 versus $147 per square foot, but the differences are relatively small.
The NAHB estimates are based on the Survey of Construction (SOC) data. The survey information comes from interviews of builders and owners of the selected new houses. The reported prices are medians, meaning that half of all builders reported higher per square foot prices and the other half reported prices lower than the median.
For the square footage statistics, the SOC uses all completely finished floor space, including space in basements and attics with finished walls, floors, and ceilings. This does not include a garage, carport, porch, unfinished attic or utility room, or any unfinished area of the basement.