Based on a survey of Sale and Contract Prices per Square Foot in 2015 by NAHB, the median prices, excluding improved lot values, range from $168 per square foot for contractor-built homes in the Pacific division to $78 per square foot for speculatively built homes in the East South Central division.
The most economical homes are spec homes started in the South region, where median sale prices per square foot (excluding improved lot values) range from $78 in the East South Central division to $87 in the West South Central division (which includes Texas), consistently below the national median sale price of $92 per square foot. Looking at the contractor-built starts in the South, prices per square foot are slightly higher ranging from $98 in the West South Central division to $100 in the East South Central and South Atlantic divisions but still below the national median contract price of $105 per square foot.
At $168 per square foot, new contractor-built single-family homes in Pacific are the most expensive to build exceeding the national average of $105 per square foot by 60%. No wonder we are seeing migration of families from California to Dallas, Texas!
New England with the median contract price of $149 per square foot is second on the list of most expensive contract prices per square foot. In 2015, New England also became home to the most expensive spec houses with the median sale price of $144 per square foot, excluding improved lot values.
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.
Annual changes in median square footage prices may reflect changes in home building costs (including material, labor, regulatory costs, etc.) but may also signal a shift in a production mix. For example, a shift towards high-end homes will be reflected in rising median square footage prices, all other things being equal. And vice versa, a shift in a home building mix towards starter, first-time home buyer’s homes will manifest itself in lower median prices per square foot.
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. Contract prices of new contractor-built homes do not include value of improved lot and, typically, are lower than sale prices of spec homes.
To make comparison more meaningful the cost of lot development is excluded from sale prices and prices are compared on a per foot basis. 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.