Building a House in Texas? Here is What it Might Cost You

This year, many homebuyers in Texas have an eye on a new construction property rather than an existing home. According to Fort Worth-based real estate agent Lily Moore, the average costs to build a house in Texas can actually make undertaking new construction the more affordable option right now.

“Building a house in Texas is still quite affordable compared to other states,” says Moore. “We don’t have state income tax, we have low property taxes — more people than ever are looking at new construction over existing homes.”

Moore adds that some Texas builders are offering low interest rates and closing cost incentives, providing real money-saving benefits for buyers who choose to build a new home.

As is always the case with real estate, pricing depends on everything from location to design preferences. But, on average, for an entry level new construction home in Texas, Moore says that buyers can anticipate spending about $325,000 for a 1,600 or 1,700 square-foot house. She clarifies that this would be a new home purchased from a builder — otherwise known as a spec home or a tract home — which is the most common arrangement in Texas.

Comparatively, Moore says pricing on similarly sized existing homes is around $295,000 or $300,000 in the current market, and most of those homes were built in the 1980s and 90s. This means they are likely due for upgrades or repairs that will add additional costs — something you won’t have to worry about when building a new home.

For custom home pricing, Moore does admit that pricing will start considerably higher — around $700,000.

“It’s quite a big price difference, but it’s also for more space. Custom builds are typically no less than 2,600 square feet up to 5,000 square feet,” she says. “You’ll also have the benefit of getting more land if you buy through a custom builder, because the lots can be on half an acre or one acre.”

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Variables aside, let’s take a closer look at the average costs to build a new home.

Breaking down the average cost to build a house in Texas in 2023

Remember that the price ranges we’re providing are a general estimate. Your agent and, eventually, your builder, can give you much more specific information on pricing.

Buying a plot of land ($6,471 per acre)

According to an April 2022 report by the National Association of Realtors, national land sales rose 6% in 2021. Land sales for residential use were also up, accounting for 4% of all residential real estate sales in 2021.

The USDA’s land values report for 2022 — which evaluates farmland real estate values — indicates that Texas’ average value per acre was $2,650 in 2022, which is a 11.3% increase over 2021’s land value of $2,380 per acre.

Land sales in Texas are divided into two categories: rural and small land sales. Small land sales account for plots of land used for recreational, residential, and small farm purposes. Small land sales, such as those purchased for building a custom home, have also risen in price, increasing by 3.8% in 2020 to average cost per acre of $6,471.

The cost of purchasing a plot of land will of course depend on location, demand, and lot size, and this is where an expert buyer’s agent will come in handy. Work with your agent to scour local land listings to find your perfect plot to build your home. Here are some things to consider:

• Land improvements: The costs to clear the land and excavate can add up quickly, be sure to account for these costs in your land budget.
• Soil type: Clay soils are prone to causing foundation issues due to their expansion in wet conditions, while clay loam is less prone to expansion and is less likely to cause shifting, cracking, or other damage to the foundation of the home.
• Local zoning laws: Individual cities and towns will have regulations on square footage, utilities, and land use. Be sure to consult with your buyer’s agent to make sure you are buying the right plot of land for what you plan to build on it.

Foundation ($4,000 – $13,500)

Foundation costs will vary depending on whether you’re pouring a slab or digging a basement, but a typical price range is between $4,000 and $13,500.

Framing ($14,000 – $32,000)

Framing is when the sticks go up and a structure actually starts to take shape. Expect to pay between $14,000 and $32,000 for this phase of building a house in Texas. The more complex the home is, the more expensive the framing will be. For example, a two-story home with 1,500 square feet of living space will likely cost significantly more to frame compared to a single-story home of the same size.

Roof ($5,500 – $12,000)

Roofing doesn’t come cheap — whether you’re putting one on a new house or replacing the roof on an existing home. The costs of a new roof typically range from $5,500 to $12,000.

Asphalt shingles are the most common roofing material in Texas, costing between $5,700 and $12,000. Metal roofs, however, are becoming more popular as they are generally more energy efficient and last longer than shingle roofs. Metal roofs are more expensive than traditional shingles, costing between $6,200 and $34,000.

Siding ($5,000 – $14,000)

Siding is another big variable: Are we talking vinyl, wood, brick, concrete, stone, stucco, or something else entirely? Siding costs range between $5,000 and $14,000, with vinyl or engineered wood siding typically pricing between $3 and $12 per square foot.

Appliances ($10,875)

You guessed it — appliance pricing also varies widely. Depending on brand, functionality, finish, and so on, you’ll spend an average of $10,875, but you can definitely drop up to $24,000 or more on high-end appliances.

HVAC System ($12,500)

The installation of a new heating and cooling system could cost upwards of $12,500 depending on the size of your home.

Plumbing System ($2,000 – $5,000)

Plumbing can cost anywhere from $2,000 to $5,000 on average — not including fixtures like sinks and toilets.

Electrical System ($500 – $2,300)

The cost to wire a house is, on average, between $500 and $2,300.

Building Permits (Variable)

Permits vary by state, city, and county, but they typically range from a few hundred dollars to a few thousand.

Finishes and Fixtures

Finishes and fixtures comprise everything from countertops to sinks, lighting to flooring. Needless to say, pricing varies wildly and depends heavily on your preferences.

Average carpet installation costs can start at several hundred dollars and go up to $3,000, while hardwood flooring installation starts around $2,500 on up to $7,000.

Laminate countertops tend to range from $790 to $1,626, while granite averages from $2,250 to $4,500.

Additional costs of building a custom home in Texas

As we mentioned, building a custom home usually comes with additional costs. Again, your agent can help you determine more accurate costs — these are average figures provided to give you an idea.

Hiring an architect ($35,000 – $140,000)

Architect fees fall between 5% and 20% of the total project cost, according to HomeAdvisor. So, for a 2,600 square foot custom home starting at $700,000 as estimated by Moore, that could mean you’re looking at anywhere between $35,000 and $140,000 for architect services.

Land survey ($375 – $745)

Land surveys, which identify your property lines and land features, range between $375 and $745.

Excavation and grading ($1,400 – $5,800)

If you’re buying a tract home, the land price will be rolled into the overall price to build a home. If you’re buying a lot on your own and then building a custom home, expect to pay between $1,400 and $5,800 for excavation.

As we mentioned above, depending on the soil type of the land you are building on, excavation and grading costs can increase if there are underground obstructions such as rock shelves or boulders.

More affordable options for building a home in Texas

While going with a bare-bones building strategy can get you into a new construction home for less, cheaper isn’t always better. Poor build quality will inevitably lead to problems down the road — anything from a leaky roof to poor sound insulation can be a frustrating discovery when you’ve only been in your new home for a few months — and there’s value in creating a home you genuinely want, not just one you’re settling for.

Alternative home building options can give you more for your money and offer valuable flexibility during the construction process.

Tiny homes ($30,000 – $60,000)

A tiny house is usually 600 square feet or less in size. They’re not ideal for large families, but building a tiny house can be faster and more affordable than a conventional home if one is a good fit with your lifestyle. On average, tiny homes cost between $30,000 and $60,000 to build.

According to a 2021 study by IPX1031, Texas is ranked as the #2 state in the U.S. for tiny homes, with the average cost to build of $48,120. Moore says that tiny homes are not especially common in her Fort Worth market, however, which means prospective buyers may need to do extra legwork to find a builder for this type of house.

Modular and prefabricated homes ($117,000)

In Moore’s market, modular homes are not common — but, in general, modular homebuilding in Texas tends to cost between $55 and $75 per square foot, with an average of $117,000.

Building a home in Texas is a great value

Between eager builders and plenty of available space for new homes, Moore believes it’s a great time to build a home in Texas.

“If I were a buyer, I would look into a new home because they’re more energy efficient, they tend to increase in value long-term, and right now they’re even more affordable than resale homes,” she says, adding that new homes come with the latest features and amenities. “For our clients, we do recommend looking into new construction before we even start looking at existing homes.”

In terms of timeframe, Moore says that since many builders have so many spec homes underway, it’s possible to get into a new construction home within just two or three months of signing a contract. Expect a wait of around ten months on a custom house purchased through a builder, and up to 24 months if you’re buying a raw piece of land and doing everything from scratch.

Moore encourages buyers to work closely with an agent who has experience with new construction homes and is familiar with the builders in the area. Quality, of course, can vary considerably and it’s best to have the guidance of an agent who knows what to expect. It’s also nice to have someone in your corner who can help you realize what’s possible when you perhaps thought otherwise.

“A lot of buyers think they won’t qualify for a new construction loan when the qualifications are actually the same,” says Moore. “When we start comparing apples to apples, I would say that 99% of the time, buyers decide to go with new construction over a preexisting home.”

Between great savings, a quick road to completion, and the peace of mind that comes from knowing you’re the first person to live there, building a house in Texas is definitely the way to go in 2022.

Header Image Source: (Bailey Alexander / Unsplash)