Cost of Building a Home in 2025
With the price of real estate predicted to rise by 4.5% (and that was before the results of the November election), more and more people are thinking about how viable it might be to build their own home.
In today’s landscape, understanding the cost of building a home in 2025 is a tricky one. The new president’s policies could mean many things for the real estate market. This could include the fast-tracking of federal land for construction and less red tape (and the associated costs) of building. However, there’s also the potential of a shrinking labor market, as up to a third of those who work in construction are foreign-born.
Taking all this into account, let’s look at what the average cost of building a home in 2025 might look like.
What 2025 Brings to the DIY House Building Market
- Pre-existing real estate vs. self-build
- What costs of building a home in 2025 are set to rise?
- What costs of building a home in 2025 are set to fall
Pre-existing real estate vs. self-build
Whatever 2025 may bring, one thing remains true: Real estate supply will continue to outstrip demand—at least for the short to medium term. Even if Trump makes it easier for builders and reduces the cost of red tape, homes still take time to construct.
Currently, according to the National Association of Home Builders (NAHB), the average cost of buying a home in the US is $414,200. The cost of building one is $449,00.
This build price includes:
- The plot purchase price.
- Excavations.
- Permits.
- Inspections.
- Building materials.
- Labor.
- Basic interior and exterior finishes.
However, if you already own the plot, then this changes the narrative. When you take this expense out of the equation, the NAHB estimates that it could be 8% cheaper to build a home than to purchase one that’s already built.
What costs of building a home in 2025 are set to rise?
This depends on a lot of “what ifs”, which could include a substantial increase on imported materials and labor costs. If, as seems very likely, import duties go up in the coming months, then if you want to utilize such materials, they’re going to be more expensive.
If there’s a labor shortage due to a reduced foreign-born workforce, then these costs could also increase. Such people also account for up to two-fifths of employees in the timber industry. A reduction in this workforce could also negatively affect the cost of such essential house building materials.
What costs of building a home in 2025 are set to fall?
However, one major area where costs could reduce—perhaps dramatically—is the cost (and ease of getting) of permits. Trump has vowed to make the process far easier and cheaper, something that could genuinely make a difference in the overall cost of building your own home.
One of the key aspects of how much a self-build costs is the skills that you bring to the table. If you need to hire professionals to undertake every aspect, then this will naturally be more expensive than if you can do some elements yourself.
Other things to consider are:
- The level of spec you choose: Top-end finishes, fixtures, and fittings will push the price up considerably.
- The location: Costs vary state by state, region by region, and neighborhood by neighborhood.
- How you fund the project: Interest rates vary considerably depending on whether you go for an FHA loan, USDA loan, TD bank loan, hard money loan, or any other option.
Of course, if you have the capital to pay upfront, then there’s no need to take interest rates into account.
The key takeaway is that, in general, the cost of building a home in 2025 is more expensive than buying a pre-existing one. However, there is (and is likely to continue to be) a shortage of real estate in the US—at least in the short to mid-term. If you already own a plot of land then it’s probably cheaper to build than buy. If permits and legislation also reduce, then this is even more likely to be the case.
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If you’re considering a self-build and need funding, then BRRRR Loans offer some of the most competitive industry rates.
Find out more and browse your range at https://www.brrrr.com, and let’s get your new home project moving…
Buy, Rehab, Rent, Refinance, & Repeat. A nationwide direct lender to real estate investors. If you have a project that needs to be funded, you’ve come to the right place.