If you're wondering how much it costs to build a house in Texas, the truth is: It varies. 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 average $296,652 required to build a house.
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.
Whether you're looking for a plot of land or a home, you'll need a great agent on your side. Clever can connect you with top-rated real estate agents who are experts in local markets across Texas. Best of all, eligible buyers receive cash back at closing!
Buying 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.
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 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
The average cost per square foot to build a house in Texas ranges between $91 and $134 per square foot while building a new home — an average of around $114 per square foot.
This estimate tracks with national norms. Across the U.S., building an average single-family home costs $296,652, 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 and beyond, you may also encounter the ongoing ripple effects of the pandemic. For example, lumber prices reached record highs, spiking 67% in 2021 — up 340% from pre-pandemic levels. Nationally, lumber costs alone have added $35,872 to the price of a typical newly constructed single-family home.
If you're worried about possible price fluctuations, an experienced local real estate agent can discuss your options. Clever is a free service that can introduce you to top-rated agents who can help you decide whether building or buying a home is your best option in the current market.
Why leave extra money on the table? Clever can connect you with one of the top real estate agents in your area, plus put cash back in your pocket.
✅ You'll work with a full-service realtor from a top broker
✅ You'll earn cash back on qualifying purchases
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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:
- Bathroom and kitchen fixtures
You’ll also get to choose many exterior finishes, such as roofing, shutters, and more.
Why finishing costs vary
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.
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 are comfortable with the potential costs, delays, and complications of construction — building a house may be a good option for you.
Further, buyers who opt to build a house may discover new possibilities in the state’s challenging, competitive housing market. According to a December 2020 report by Texas A&M University’s Real Estate Center, Texas’ home inventory recently reached historic lows. 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 is booming.
For example, for six consecutive months in 2020, Texas saw applications for single-family construction permits steadily rise. In October 2020 alone, the state’s five biggest cities received 11,818 permit applications.
To help you choose between buying vs. building in Texas, we recommend speaking with an experienced real estate agent who's familiar with Texas real estate trends. Clever can connect you with agents from top brokerages such as Keller Williams, RE/MAX, and Coldwell Banker.
Whether you end up purchasing a plot of land or a home that's move-in ready, eligible buyers can also qualify for cash back at closing!
Clever can help you find your dream home — and keep more money in your pocket too!
With Clever, you'll:
✅ Buy with a top agent from major brokerages like RE/MAX and Century 21
✅ Get real-time MLS updates
✅ Earn cash back on qualifying purchases
Clever's service is 100% free, with zero obligation. You can interview as many agents as you like, or walk away at any time. Enter your zip code to find a top local agent today!
FAQs about building a house in Texas
Is it cheaper to build or buy a house in Texas?
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 $296,652 required to build a house on average. Learn more with our in-depth guide to buying land and building a house.
How much does it cost to build a house in Texas?
According to the National Association of Home Builders, the average cost to build a single-family home is $296,652, or around $114 per square foot. Learn more — including how you can save thousands on realtor fees!