Land | Permits | Construction | Finishing | Vs. buy
| ✍️ Editor's take: If you’re looking for a home in Texas, you shouldn’t rule out building one — but first, you should be aware of the current market and potential tradeoffs. |
In general, it’s more convenient and less expensive to purchase a pre-existing house. In 2020, the median price of a pre-existing house in Texas soared to $273,300 but still remained lower than the $308,901 required to build a house on average.
However, cost isn’t always the top consideration for buyers who want to build a house. After all, new construction presents a rare opportunity to customize every inch of your home.
If you’re interested in building a house in Texas, read on to learn more about these and other factors you should take into consideration.
Purchasing land in Texas
Before building a house in Texas, you’ll have to purchase a plot of land. Costs vary widely, depending on the location, type, and amount of land you plan to buy.
The average single-family home sits on a half-acre lot, so we recommend searching for land in that range.
You can find finished lots in cities, existing subdivisions, or other areas that are already zoned for single-family homes.
It’s more convenient to opt for a finished lot — rather than raw land — because these generally come with access to utility hookups.
Finally, keep in mind that your dream lot may require some preparation before construction begins.
If you need to demolish a pre-existing house, expect to spend around $6,750 if the house doesn’t have a basement, or around $12,643 if it does.
Similarly, if you’re planning to buy rural land for a future ranch or homestead, make sure you’re prepared to navigate some extra steps. For example, you might have to confirm the acreage of unsurveyed land, clear timber, or cope with creeks and other topographical features.
»LEARN: How to Buy Land and Build a House
Lot Prices by City
City | Cost |
|---|---|
Houston | $51,500 - $2.2M |
San Antonio | $15,000 - $1.15M |
Dallas | $18,999 - $2.335M |
Austin | $180,000 - $3.695M |
Fort Worth | $69,000 - $529,900 |
Methodology: All data was pulled from Zillow active listings on 12/30/20. Lots were between one-quarter and one-half acre. | |
Obtaining building permits
Before building your new house, you’ll need to obtain all the right permits. On average, HomeAdvisor estimates that people spend $1,200-2,000 on permits when building a home — but costs can vary widely depending on local regulations.
In most cases, you will apply for a permit once you’ve obtained a blueprint or drawing from an architect. As long as you start construction within six months, permits are typically valid for however long it takes to finish building your home.
The permit process might initially seem daunting, but it’s an essential step you can’t afford to skip. Homeowners who fail to obtain permits may face steep fines, a lack of insurance coverage, or even demolition if a home doesn’t meet local standards.
Penalties aside, there’s an even more crucial reason to obtain permits: your safety.
Municipalities require permits to ensure that homes are up to code. In Texas, these codes prevent people from building houses that are poorly suited for the state’s hurricanes, flooding, or other possible natural disasters.
Budgeting for construction costs
In Texas, you can expect to pay between $91 and $134 per square foot while building a new home — an average of around $113 per square foot.
This estimate tracks with national norms. Across the US, construction for an average single-family home costs $296,652 on average, or around $114 per square foot.
These averages can help you create a budget, but your final costs will vary depending on:
- The cost of labor in your local area
- The building materials you choose
- The size of your house
As you budget for construction in 2021, you may encounter the ongoing ripple effects of the pandemic. For example, supply chain issues temporarily caused the price of lumber in Texas to nearly triple last fall before a tariff adjustment restored equilibrium.
If you encounter unexpected price fluctuations, in-depth research about typical pricing and a flexible construction schedule are your best defenses against overpaying.
Navigating finishing costs
Among all construction costs, the largest portion of your budget will go toward finishing costs, which cover everything that defines the look and feel of your home.
You should expect to devote around 25% of your total construction budget to interior finishes such as:
- Flooring
- Cabinets
- Lighting
- Appliances
- Bathroom and kitchen fixtures
- Doors
You’ll also get to choose many exterior finishes, such as roofing, shutters, and more.
Why finishing costs vary widely
More than almost any other expense, the quality of the finishes you choose will have a major impact on the total cost of building your home.
For example, basic finishes may be sufficient for a future rental property — and luxury touches can add up fast.
Tier | Examples | Approximate Cost |
|---|---|---|
Builder grade | White paint, oak cabinets, basic carpet or linoleum flooring | $90/square foot |
Upgraded | Crown molding, energy efficient windows, hardwood floors | $175-310/square foot |
Luxury | Smart home features, slate roofing, marble flooring | $525-1,110/square foot |
Source: Thumbtack | ||
Finally, don’t forget to factor in the cost of labor — which also varies locally. Homeowners in Texas’ major cities should expect to pay a bit more than those in rural parts of the state.
Is it better to build or buy a house in Texas?
If you’re unsatisfied with your options for pre-existing houses in Texas — and can afford to wade through the costs, delays, and complications of construction — building a house may be a good option for you.
In Texas, buyers who opt to build a house may discover new possibilities in the state’s challenging, competitive 2021 housing market.
In 2020, Texas’ inventory of available homes dropped to historic lows, according to a December report by Texas A&M University’s Real Estate Center. Houses flew off the market almost as quickly as they were listed, forcing buyers to compete for a slim selection of options.
At the same time, interest in new construction was booming.
For six consecutive months in 2020, Texas saw applications for single-family construction permits steadily rise. In October alone, the state’s five biggest cities received 11,818 permit applications.
In other words, you'll be in good company. Though building a house is no small feat, you may find — like many others — that it's an option worth exploring.