Cost to Build a House: Guide to Houston Building Cost Budget

10:13 Apr 2023
Cost of Building a House

When preparing for building a home the most important question an owner wants to know is what is the cost to build a house.

To answer the high priority question of what is the cost to build a house, the builder will need to qualify their response, after their response to you, it depends!

There are two standard answers to this question. The first answer might be to justify a budgetary expense question needed to prepare for the home design process.

This answer requires the builders to understand the proposed building’s square footage, how many stories the structure is, the types of finishes, the number of rooms and bathrooms, and any special features.

With this information, a builder can provide you with an estimated budget range to use as a target construction budget.

The second response may be to justify the actual cost to build a house. To properly answer this question requires construction documents.

The construction documents required are the building lot, architectural plans, engineering plans, the scope of work, specifications, and a finish schedule. An allowance schedule can substitute for the finish schedule if owner selections have not been determined.

There is nothing more validating for confirmation of professional success than planning and building a luxury custom home that showcases your lifestyle.

For most people, this is commonly a once in a lifetime opportunity. The process is both complex and time consuming and requires the stewardship of a team of professional trusted advisers.

A custom home is not limited to being defined by just price or size, although these factors contribute to the total cost. But rather is defined by the features of a home that is designed as a one-of-a-kind house with architectural significance.

Great architectural design paired with a well selected home site makes for a home built for the ages.

The location of the building site is a critical and defining element of both the expense and design.

It requires that the home design will be consistent in harmony and balance with its neighboring environment.

This not only applies to the curb appeal of the neighboring homes but the natural terrain and landscape of the lot.

Discussing the accurate cost to build a house requires the qualifications we have previously pointed out.

We will analyze the total amount of custom homes by evaluating the major components that make up the total investment made in building a new luxury home.

Learn How Builders Determine the Accurate Cost to Build a House

Cost of Building a House

The Cost of the Home Lot

The cost to build a house begins with understanding the price of a building site. The most important factor is the location.

A unique lot with an ideal location will always be in high demand and dictate the highest price point.

A high demand home site with an ocean or mountain vista view can be priceless. That is due to the economic factors of limited supply.

The same principle applies to any local home lot available for sale.

Major cities’ premier lots will command greater prices than suburban lot prices.

This is due to the shortage of available building sites available in the metro area and the convenience they provide to the owners.

In fact, in most cases, a buyer is required to purchase a metro area property with an existing dwelling on it for the sake of the lot.

Whereas in suburban areas there are a larger number of building sites, the premier lots like country club lots still require a premium.

There are also special conditions that affect the price of the lot other than the location of the property.

These conditions include the price of clearing the property in preparation for a new home. These items that need to be removed can be trees or an existing dwelling.

They can include special requirements like preparing the site for fresh water and waste water infrastructure.

In remote locations, access roads may also have to be created to get admittance to the lot and require well water, septic systems, and electrical generators in some cases.

Major city suburban lots’ prices can range from $20/sf to $40/sf depending upon the size and amenities of the community.

Whereas urban metro lots can be $40/sf to $150/sf in the same major city.

Of course, these prices would not apply to cities such as San Francisco, New York City or high-end areas of Los Angles.

These cities are in another price hemisphere when it comes to raw land market price due to demand and supply.

The Cost of the Home Design Stage

The actual cost of home design is more than just the price of hiring an architect.

Depending on the owner’s needs and proposed residence the project may require additional professionals during the design phase.

These pros can include interior designers, landscape architects, and general contractors.

The goal of the design stage is to prepare a home plan to the specifications of the owner and ultimately prepare construction documents to build the residence.

At the very least the owner will always require an architect and a structural engineer to complete the design goals.

This can cost in the range of $2/sf to $8/sf or stated differently for complicated home designs an average of about 10% of the total construction budget.

In the case of the project requiring a full design team, the cost can range between 10% to 18% of the total construction price if you are including fabrics.

The Cost to Build a House Structure & Square Footage Effect

Most people understand that the construction cost of a home is represented by labor, equipment, and materials.

Most people also recognize the impact that the total square footage has on the price of the dwelling. The cost impact of greater square footage is undeniable.

Another major factor of the construction expense of building a custom home is the shape and form of the structure of the home. The less vernacular the form of the structure, the higher the total price.

The two major architectural factors that affect the cost to build a house are the architectural structure and the total living and under roof square footage.

Cost of the Homes Architectural Structure

A traditional home’s architectural structure is a wood rectangle-shaped structure with a specified flat ceiling height and a medium pitched gable roof. This is considered to be a cost-effective basic design.

Experienced skilled trades labor and builder grade materials have been developed over the years to represent a cost-effective solution for these structure forms.

As a house structure’s form becomes more complex and difficult the shapes require more experienced labor and a more sophisticated method and means of construction.

Irregular shaped structures, radius walls, and cantilevered structures substantially contribute to the ultimate price of the home.

These factors are more expensive to produce.

Cost of Building a House Houston

Square Footage Cost Affect-

It may be obvious that the greater the home’s total square, the greater the construction cost.

What is not so commonly known is that most home square footage published is a living area.

The living area’s square footage does not include any home space that is non air-conditioned space.

So, areas like garages, porches, lanais, or porte cochere are not included but have a considerable impact on the actual total construction expenditures.

The construction price of the structure alone can impact the labor and material expense by more than 400% from the traditional 4 squares to an obtuse structure for the very same square footage.

Combining a structure that has a great deal of square footage with a challenging structure, the impact on cost can double or triple the average structural expense.

The Construction Hard Cost

The total construction price of building a custom luxury home includes materials, labor, equipment, and general conditions. The sum of these elements represents what is commonly referred to as the construction hard cost of the home.

The Labor Cost –

The overall expense of labor has a direct relationship to the complexity and detail of the design and finishes.

Skilled labor typically represents 30% – 35% of the total construction price of a luxury home. In the event of a highly detailed architectural home, the percentage can swell to nearly 50%.

The direct labor expense is proportionate to the architectural design. The more complex the framing, the more expensive the labor.

These situations are generally warranted by a high level of job site material fabrication.

The use of fabricated materials such as trusses can reduce labor expenses but will increase the material side of the ledger.

Each of these situations needs to be carefully analyzed to understand the overall impact on the total construction cost.

The General Conditions Cost –

General conditions are the indirect expense associated with the direct sticks and bricks expense of a project.

These expenses reflect such costs as job site supervision, management, permits, trash removal, temporary utilities, storage, and temporary office facilities. The general condition expense represents 6% to 12% of the total job construction price.

This expense range is also reflective of general conditions in luxury home construction.

What drives this expense higher are layers of third-party inspections and 3rd party supervision. Difficult access will also contribute to the general condition expense, like building temporary roads or additional equipment for unusual material placement.

Another factor that can increase the expense amount above the normal range is projects in remote locations.

The Equipment Cost –

The equipment expenses in luxury custom homes commonly refer to the equipment associated with supporting the labor function.

This can be scaffolding or machines or temporary storage facilities. Portable generators are a common expense when the location does not have electricity.

Security and lock-up storages can also be common for areas that are highly visible yet unprotected during construction.

These types of expenses are typically reflected in general conditions.

The Cost of Finishes and Selected Materials –

The expense of selected materials and finishes can have a profound result on the total construction price. Material expenses represent a similar price range as labor does.

Material expense is similar to labor expense ranging from 30% – 35% of the total construction price budget.

Again, like labor, the range can escalate with the selection of rare and foreign materials, including items that require labor intensive fabrication.

The price of luxury custom home building Houston will continue to increase as materials, labor, and land increase in expenses and value over time.

Although the components and their relationship with construction costs one will remain.


The cost to build a house continues to increase as time passes, due principally to general economic inflation.

Understanding these expenses contributes to the ability to properly manage and value engineer alternative methods and means in executing the construction of a home.

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