Here Are the Best and Worst States to Build Your Home, Study Finds

You might want to reconsider building a home.

If your dream home is financially out of reach, you might be thinking, “Why not just build my house?” After all, you could customize your home to your needs. And with existing homes being so expensive, it might even make financial sense.

While it’s certainly true that building a home can be a more attractive option, the costs can vary widely state by state, found a new study by GOBankingRates.

The study took several factors into consideration, including the average cost of building a new home in the state’s three largest cities, the cost of building a modest option (a 1,800-square-foot, single-story house with a half-finished basement) in every state and the average hourly wage for construction workers in the area. That information was then weighed to determine which states were the most cost-friendly for people looking to build a home.

The results indicated a clear correlation between the estimated cost of buying and the cost of building by state. The 10 states that scored highest in study included a handful of the states with the highest median home values, according to a separate GOBankingRates study. Likewise, the 10 states with the lowest cost of building featured eight of the 10 states with the lowest median home values.

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That said, there is a surprising number of states where the average cost of building a new house is actually lower than the median home price in that state. All told, 11 states featured a lower average cost of building a home than the median home value, indicating that the potential advantages of building might be even better in those states than elsewhere.

What’s more, if you’re thinking of building a home that’s much more modest, your prospects could be even better. Looking specifically at the projected cost of the smaller, single-story house included in the study, building costs are less than the median home value in about half of all states.


Here are the 10 least expensive states to build a home (based on all three of the factors analyzed), along with the average cost to build a home in the three largest cities in each state:

Oklahoma: $205,900.16
Mississippi: $192,427.09
Nebraska: $214,935.04
Arkansas: $207,881.49
Michigan: $194,646.19
West Virginia: $202,650.77
South Dakota: $228,408.11
Iowa: $209,862.83
Kansas: $219,373.23
Ohio: $197,340.80

And here are the 10 most expensive states to build a home, along with the average cost to build a home in the three largest cities in each state:

Hawaii: $475,044.48
California: $439,380.48
Washington: $304,015.79
Massachusetts: $300,290.88
Alaska: $314,318.72
New York: $274,137.28
Illinois: $239,107.31
New Jersey: $279,843.52
Connecticut: $298,626.56
Delaware: $243,704

Up Next: Best and Worst States for First-Time Home Buyers

Methodology: To determine the least and most expensive states to build a home, GOBankingRates looked at three factors: 1) the average cost to build a new one-story, 1,800-square-foot home with a half-finished basement, sourced from the Lincoln Institute of Land Policy; 2) the average cost to build a house of all sizes in the three largest cities in each state, sourced from National Association of Home Builders and Sperling’s Best Places; and 3) the mean hourly wage for construction laborers, sourced from the Bureau of Labor Statistics.

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About the Author

Joel Anderson is a business and finance writer with over a decade of experience writing about the wide world of finance. Based in Los Angeles, he specializes in writing about the financial markets, stocks, macroeconomic concepts and focuses on helping make complex financial concepts digestible for the retail investor.