Building Costs Per Square Foot in the State of Texas, USA

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Building Costs Per Square Foot in the State of Texas, USA

  • Texas Residential Construction Index – 2000 to 2021 (TAMU)

  • Texas Single-Family Housing Construction Permits – Index 2000 to 2020 (TAMU)

  • Texas Homes for Sale – Days on the Market 2011 to 2021 (TAMU)

  • Median Selling Price of New Homes in Texas – 2011 to 2021 (TAMU)

  • Building Costs Per Square Foot for Luxury, Semi-Luxury, Best Standard, Good Standard, Average Standard and Minimum Standard Homes Single Family Homes in the State of Texas.

  • List of 34 Metropolitan Areas/Cities in Texas – Percentage Deviation of the City/Town Building Cost from the National Average ($X)

  • Cheapest and Most Expensive Places To Build in Texas.

 

Nearing Completion - Newly Built 4 Bedroom Single Family Home with 3.5 Bath and Double Garage, Reinforced Concrete Superstructure and Slabs - Located on the Guadalupe River Estates on 700 Sunrise Trail, Spring Branch, Texas

Nearing Completion – Newly Built 4 Bedroom Single Family Home  (3595 square feet) with 3.5 Bath and Double Garage, Reinforced Concrete Superstructure and Slabs – Located on the Guadalupe River Estates on 700 Sunrise Trail, Spring Branch, Texas – REALTORS.COM

 

Nearing Completion - Newly Built 4 Bedroom Single Family Home with 3.5 Bath and Double Garage, Reinforced Concrete Superstructure and Slabs - Located on the Guadalupe River Estates on 700 Sunrise Trail, Spring Branch, Texas

Nearing Completion – Located on the Guadalupe River Estates on 700 Sunrise Trail, Spring Branch, Texas

Texas is the eighth most expensive state to build a home in the USA, with construction costs being 5% higher than the national average. Omitting the sharp decline in construction activity caused by the Covid-19 pandemic in 2020, the total value of home building projects in the United States is expected to increase from the 2019 value, while commercial building and civil engineering are not expected to exceed the 2019 value. According to the Cumming 2021 Report, residential and civil engineering projects spurred construction activity in Texas despite a 15% unemployment rate in the previous year. Dallas-Fort Worth contributes the largest contracts value of construction projects in the region, with about $20.6 billion worth of projects but the Texas Central High Speed Railway project is responsible for this high figure, valued at $18.0 billion. There are 10 mega projects in DFW altogether. The state of Texas is the second biggest construction market in the USA, thanks to Dallas-Fort Worth and Houston which rank as the second and third largest construction markets in the country respectively. Since 2019, a little more than $420 billion worth of projects have been proposed, completed or underway in Texas alone. A regional construction boom is usually characterized by increasing costs, which will eventually decline as demand falls and overall developments decrease in number. Texas is no exception to this trend and it’s one of the busiest construction markets in the USA, so building costs will remain among the highest in the country for the time being. While many metropolitan areas in the USA saw a decline in construction activity during the year of the Covid-19 pandemic, Dallas-Fort Worth is one of those which remained resilient, creating 3,700 new jobs in 2020.

Texas Residential Construction Index – 2000 to 2021 (TAMU)

The cost of building depends on the local construction index which measures changes in output volumes, wages and material costs. According to the Texas Real Estate Research Center (TAMU), construction activity in the state of Texas can be depicted by changes in the Coincident Construction Index (CCI) and the Leading Construction Index (LCI). The CCI measures the actual changes in output volumes, labour/material costs taking place in real time whereas the LCI is a predictive index which forecasts price and volume changes in the coming months. Construction output volumes can be predicted based on the number of building permits issued and new projects which have begun the construction phase. Price will change based on the construction output volume (supply and demand).

So by how much have construction costs changed in the last two decades since 2000? The charts below show the residential construction index in Texas over the last 20 years:

Taking 2000 as the base year, both the CCI and LCI were around 100 at this point. Between 2000 and 2003, the CCI took an upward concave slope while the LCI took an upward convex slope which is way below the CCI, meeting at the 124 mark in the third quarter of 2003. The CCI continued rising at a smaller gradient to a little over 130 in the first quarter of 2005. As in the initial three-year span from the origin, The LCI exhibited a projection which is way below the CCI from 2003 to 2005. The CCI continued its upward curve, rising sharply from a little over 130 in 2005 to 158 in the middle of 2006. The LCI predicted a similar sharply rising curve but only for the first 9 months of the year 2005, falling short of the CCI trajectory by roughly 9 months or 50%. After reaching its highest point ever (158) within the 20-year span, the CCI fell sharply along its steepest gradient, landing at 100 in the first quarter of 2009. The decline continued until the first quarter of 2011, settling at 73. The LCI followed the same gradient, falling sharply from 140 in the middle of 2006 to 65 in the beginning of 2009. It then climbed to 75 in the first quarter of 2010, before falling again to 75 in the last quarter of 2010. The LCI eventually climbed again to meet the CCI curve at 73 in the first quarter of 2011.

The CCI and LCI intersected for the first time in 2011, a turning point for the LCI curve which went from underestimations to overestimations. The first quarter of 2011 also happens to be the lowest point in 20 years since 2000 for the CCI. From there, the CCI took an upward trajectory at a smooth slope until the middle of 2015, settling at 109. The CCI took a near-plateau until the middle of 2017, from which it started climbing at a small gradient and exhibiting a near-plateau from the second quarter of 2018 to the first quarter of 2021.

As you can see on the charts, the LCI projection stayed above the CCI curve, rising and falling intermittently from mid-2015 to the first quarter of 2021. The projected LCI was way off the market coincident index from 2011 to 2016 and 2017. The deviation from the prevailing market index was exceedingly high from the end of 2018 to 2021, taking a steep upward trajectory which crossed the 160 mark in 2021.

Texas Single-Family Housing Construction Permits – Index 2000 to 2020 (TAMU)

This index measures the number of construction permits for single-family homes which have been approved on a monthly, quarterly and annual basis in the state of Texas. A look at the charts below shows that the Texas SFH index curve between 2000 and 2020 is similar in shape to the US National SFH index curve, although the Texas SFHI curve is below the national curve, its deviation from the national index getting wider as the years go by. Taking 2000 as the base year starting at 100, the Texas SFH index slightly dipped to 96 in the middle of 2000, before rising steadily to 142 in the last quarter of 2005, with about 3 dips on the curve being of a negligible nature, easily cancelled out by the overall rise. The Texas SFH index fell sharply along a very steep slope, from 142 to 30 in 2009. It then rose along a convex slope to 41 in the first quarter of 2010. From there, it took a smooth concave dip, with a base of 32 in 2011, and rising smoothly to 52 in the second quarter of 2013. The index fell slightly to 50 in 2014, before rising again on a gentle slope to 73 in 2018. The SFHI fell to 68 in 2019, and then rose to 77 in 2020. Finally, the index climbed sharply to 100 by the end of 2020.

Texas Homes for Sale – Days on the Market 2011 to 2021 (TAMU)

The number of active home listings which are sold within a specific period (i.e. monthly, bi-monthly, quarterly and annually) indicate the demand for these types of properties in the state of Texas. As the chart below shows, there are two curves indicating the number of days on the market for existing homes and new homes. It’s quite clear that existing homes sell much faster than new homes due to the depreciated lower-priced value of established homes.

Number of Days on the Market – Existing Homes:

In 2011, the number of days on the market for existing homes (DEH) was 88 days in the first month, which climbed to a maximum of 94 days in the middle of the year, then declined again to a minimum of 86 days in the closing month of 2011. The decline continued smoothly along a fairly steep slope to settle at 62 days in the beginning of the last quarter of 2013, so this was a continuous downward almost linear curve with a hypotenuse of (94-62=32). The number of days it takes to sell an existing home (DEH) then took a gentle slope with a smaller gradient, settling at 52 days in the beginning of the last quarter of 2015, which was a decline of 10 days from 2013. The DEH then took an average plateau which ran until the middle of 2020, settling at 53 days. Eventually, the DEH fell sharply along a very steep slope, landing at 33 days in the end of the first quarter of 2021.

Number of Days on the Market – New Homes:

The number of days it takes to sell a new home in Texas (DNH) is shown in the charts. The number of days on the market for new homes was 108 days in the first month of 2011. The DNH declined along a medium slope to 83 days in the third quarter of 2013. From there, it took an upward curve on a medium slope, to land at 91 days in the third quarter of 2014. If we average the dips and peaks between 2014 and the beginning of 2019, the result is a plateau which closes at 95 days. The number of days it takes to sell a new home (DNH) then took a downward curve from this point onward, along a gentle slope, landing at 87 days in the second quarter of 2020. Just like existing homes, the number of days it takes to sell a new home fell sharply along a very steep slope, from 87 days to 60 days in the end of the first quarter of 2021.

Deductions from the Trends – 2011 to 2021

From the charts it can be deduced that the number of days it takes to sell an existing home in Texas has been declining over a 20-year span since the middle of 2011, falling from a record 94 days to 60 days in 2014 and 52 days in the last quarter of 2015. The DEH remained stable between 2015 and the first quarter of 2020, finishing at 53 days, and then falling sharply to 33 days in the beginning of the first quarter of 2021.

The number of days it takes to sell a new home in Texas has declined as well over a 20-year span since 2011, falling from 108 days to 83 days in the middle of 2013. The DNH rose to 91 days in the 3rd quarter of 2014, before taking a stable path up until the beginning of 2019, closing at 95 days. It fell smoothly to 87 days in the second quarter of 2020 before taking a plunge that landed at 60 days in the beginning of the second quarter of 2021.

Median Selling Price of New Homes in Texas – 2011 to 2021 (TAMU)

The chart below shows the median selling price of new homes in the major metropolitan areas of Texas. These are Austin-Round Rock, Dallas-Plano-Irving, Fort Worth-Arlington, Houston-The Woodlands-Sugar Land and San Antonio-New Braunfels.

From the charts, it can be seen that since 2011 the most expensive place to buy a newly built home is Dallas-Plano-Irving. As from 2017, the second most-expensive place to buy new homes was Austin-Round Rock, followed by Houston-The Woodlands-Sugar Land and Fort Worth-Arlington. The cheapest place to buy newly built homes is San Antonio-New Braunfels.

Houston and its metropolitan areas started off as the second most expensive place to buy a new house from 2011 to the last quarter of 2016. From there up to the first quarter of 2020, it dropped to 3rd place, being overtaken by Austin-Round Rock.

Fort Worth/Arlington started off as the cheapest place to buy a new house from 2011 up to the beginning of 2015. From there onwards, the selling price increased surpassing San Antonio/New Braunfels which fell to the bottom position as the cheapest place to buy a new home in Texas. In the second quarter of 2020, Fort Worth/Arlington broke out as the third most expensive place to buy a new home in Texas.

From 2011 to mid-2015, all major metropolitan areas in Texas exhibited a smooth rise in selling prices on a medium slope. Selling prices in Fort Worth/Arlington rose from a median value of $185,000 per home to $270,000. In San Antonio/New Braunfels, prices of new homes rose from $188,750 to $278,000 per home. In Houston/Woodlands/Sugar Land, prices of newly built homes rose from $213,000 to $327,500. In Austin/Round Rock, the price of newly built homes rose from $213,000 to $312,500. In Dallas/Plano/Irving, the selling price of new homes rose from $241,850 to $335,000.

While the selling price in Dallas, Austin and Fort Worth continued its upward trajectory up to the beginning of 2017, Houston and San Antonio had levelled off beginning in mid-2015, with Houston taking a gradual decline in prices along a gentle slope, up to the second quarter of 2020. Prices in San Antonio took a plateau, remaining relatively stable until the second quarter of 2020.

Prices in Dallas, Austin and Fort Worth levelled off from the beginning of 2017, remaining relatively stable until the beginning of the second quarter of 2020, from which all three took an upward curve on a medium to steep slope.

Between 2017 and the second quarter of 2020, the selling prices of new homes in Texas were as follows:

Dallas/Plano/Irving – The median price was $357,500 in 2017 and then decreased on a gentle slope, ending at $336,000 in the second quarter of 2020.

Austin/Round Rock – The median price was $323,000 in 2017, and then decreased on an undulating curve with rise and falls, ending at $303,000 in the second quarter of 2020.

Houston/Woodlands/Sugar Land – The median price was $306,000 in 2017, and then decreased on a smooth gentle slope, ending at $291,000 in the second quarter of 2020.

Fort Worth/Arlington – The median price was $304,000 in 2017, and then remained relatively stable, ending at $291,000 in the second quarter of 2020.

San Antonio/New Braunfels – The median price was $260,000 in 2017, and  then remained relatively stable, ending at $260,000 in the second quarter of 2020.

From the second quarter of 2020, the prices of new homes in Dallas, Austin and Fort Worth took an upward curve along a medium to steep slope. The values of new homes in these metropolitan ended up at $364,000, $334,000 and $320,000 respectively, towards the end of the first quarter of 2021.

In the metropolitan areas of Houston and San Antonio, the price of newly built homes gradually increased along a gentle slope to finish off at $305,000 and $276,000 respectively, towards the end of the first quarter of 2021.

Building Costs Per Square Foot for Single Family Homes in the State of Texas, USA (NATIONAL ESTIMATOR)

In any housing or building project, material specifications as well as architectural design will determine the quality of the new house. In the United States, private homes can be divided into the following groups or classes:

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Class 1 – Luxury homes

Class 2 – Semi-luxury homes

Class 3 – Best standard homes

Class 4 – Good standard homes

Class 5 – Average standard homes

Class 6 – Minimum standard homes

In actual projects taking place on the ground, the construction cost per square foot is inversely proportional to the contract sum of the project. That means the construction cost per square foot will increase as the project value decreases, and the square foot cost will decrease as the project value increases. How is this? Builders’ pricing habits have a bearing on the square foot cost, which also includes the contractor’s profit and overheads. In a small building project, contractors have to factor in the risk of under-pricing, loss, profit erosion and being stuck on breakeven point. Thus, a higher profit margin is needed in this case to mitigate the risks. Larger projects with a huge contract sum are safe for contractors in terms of the amount of profit and cushion for risks. The building costs below were last updated in December 2020:

Class 1 – Luxury Single Family Homes

The building cost per square foot for luxury private homes in Texas ranges from $362.13 per sqft to $555.14 per sqft, with the average being $427.37 per sqft. As the bar chart shows below, bigger homes with a large gross floor area have the lowest building costs per ft2, and smaller homes with a small gross floor area have the highest building costs per ft2. Medium-sized homes are somewhere in between. Generally, the building cost per square foot decreases as the size of the house gets bigger, and increases as the house gets smaller.

Class 1 Luxury Single Family Homes Building Costs TEXAS

Class 1 Luxury Single Family Homes Building Costs TEXAS

Class 2 – Semi Luxury Single Family Homes

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The building cost per square foot for semi-luxury private homes in Texas ranges from $220.09 per sqft to $337.37 per sqft, with the average being $259.73 per sqft. As the bar chart shows below, bigger homes with a large gross floor area have the lowest building costs per ft2, and smaller homes with a small gross floor area have the highest building costs per ft2. Medium-sized homes are somewhere in between. Generally, the building cost per square foot decreases as the size of the house gets bigger, and increases as the house gets smaller.

Class 2 Luxury Single Family Homes Building Costs TEXAS

Class 2 Luxury Single Family Homes Building Costs TEXAS

Class 3 – Best Standard Single Family Homes

The building cost per square foot for best-standard private homes in Texas ranges from $142.28 per sqft to $216.10 per sqft, with the average being $166.57 per sqft. As the bar chart shows below, bigger homes with a large gross floor area have the lowest building costs per ft2, and smaller homes with a small gross floor area have the highest building costs per ft2. Medium-sized homes are somewhere in between. Generally, the building cost per square foot decreases as the size of the house gets bigger, and increases as the house gets smaller.

Class 3 Luxury Single Family Homes Building Costs TEXAS

Class 3 Luxury Single Family Homes Building Costs TEXAS

Class 4 – Good Standard Single Family Homes

The building cost per square foot for good-standard private homes in Texas ranges from $103.83 per sqft to $159.23 per sqft, with the average being $122.54 per sqft. As the bar graph shows below, bigger homes with a large gross floor area have the lowest building costs per ft2, and smaller homes with a small gross floor area have the highest building costs per ft2. Medium-sized homes are somewhere in between. Generally, the building cost per square foot decreases as the size of the house gets bigger, and increases as the house gets smaller.

Class 4 Luxury Single Family Homes Building Costs TEXAS

Class 4 Luxury Single Family Homes Building Costs TEXAS

Class 5 – Average Standard Single Family Homes

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The building cost per square foot for average-standard private homes in Texas ranges from $84.28 per sqft to $129.08 per sqft, with the average being $99.38 per sqft. As the bar graph shows below, bigger homes with a large gross floor area have the lowest building costs per ft2, and smaller homes with a small gross floor area have the highest building costs per ft2. Medium-sized homes are somewhere in between. Generally, the building cost per square foot decreases as the size of the house gets bigger, and increases as the house gets smaller.

Class 5 Luxury Single Family Homes Building Costs TEXAS

Class 5 Luxury Single Family Homes Building Costs TEXAS

Class 6 – Minimum Standard Single Family Homes

The building cost per square foot for minimum-standard private homes in Texas ranges from $66.48 per sqft to $101.89 per sqft, with the average being $78.42 per sqft. As the bar graph shows below, bigger homes with a large gross floor area have the lowest building costs per ft2, and smaller homes with a small gross floor area have the highest building costs per ft2. Medium-sized homes are somewhere in between. Generally, the building cost per square foot decreases as the size of the house gets bigger, and increases as the house gets smaller.

Class 6 Luxury Single Family Homes Building Costs TEXAS

Class 6 Luxury Single Family Homes Building Costs TEXAS

List of 34 Metropolitan Areas/Cities in Texas – Percentage Deviation of the City/Town Building Cost from the National Average ($X), in Ascending Order:

There are 1,220 municipalities grouped into 34 metropolitan areas in the state of Texas. The bar chart below indicates that building costs vary in each metro city/town. The construction cost per square foot in each of these metropolitan cities varies from the state and national average by a certain percentage based on the location factor also known as the local modifier.

The building costs for single family homes in this post include all Bills of Quantities with the exception of HVAC installations. So the total costs include all construction trades, electrical installation, plumbing, built-in cupboards, plumbing fittings, local authority fees and permits, utility connections (water, gas, sewer etc), professional fees (architect, engineers etc.), contingency sum, contractor’s profit, attendance and overheads. The Location Factor represents the value of the local construction index, i.e. variation in the cost of labour, materials and supervision. In working out the building costs per square foot, the cost of land, existing infrastructure, land servicing, allowance for escalation, interest costs, parking and loose furniture are not included in the estimate. Ground conditions are assumed to be normal for estimating purposes, but for your own project, you have to factor in ground conditions, weather and climate because no two projects are the same.

The percentage deviation of building costs from the National Average for each metropolitan area in Texas is shown below.

If $X is the Average National Building Cost in the USA, then it will cost the following to build a residential property in each metro city/town in Texas:

Texas    5% (5% more than X)

  1. Childress              -14%    
  2. Wichita Falls       -9%       
  3. Brownwood       -8%       
  4. Texarkana           -8%       
  5. El Paso                  -7%      
  6. Lubbock               -7%       
  7. Tyler                      -7%       
  8. McAllen               -6%       
  9. San Angelo         -6%       
  10. Waco                     -3%       
  11. Woodson            -3%       
  12. Abilene                -2%       
  13. Amarillo               -2%       
  14. Del Rio                  0%         
  15. Arlington             1%         
  16. Longview             1%         
  17. Fort Worth          2%         
  18. Palestine             2%         
  19. Greenville           3%         
  20. Texas                    5%         
  21. Dallas                    6%         
  22. Giddings              6%         
  23. Plano                     7%         
  24. Bryan                    8%         
  25. Lufkin                    8%         
  26. San Antonio       8%         
  27. Midland               10%       
  28. Austin                   12%       
  29. Victoria                 12%       
  30. Beaumont           18%       
  31. Corpus Christi    18%       
  32. Galveston           24%       
  33. Houston               26%       
  34. Huntsville            26%       
  35. Bay City                39%       

The Metropolitan Area List above as well as the Bar Graphs below indicate that Childress is the cheapest city to build a private home in the state of Texas, and Bay City is the most expensive city to build a home. Building costs are -14% below the national average in Childress and 39% above the national average in Bay City.

Deviation of City Building Costs from National Average TEXAS - Alphabetical Order

Deviation of City Building Costs from National Average TEXAS – Alphabetical Order

 

Deviation of City Building Costs from National Average TEXAS - Values Ascending Order

Deviation of City Building Costs from National Average TEXAS – Values  in Ascending Order

Cheapest Places To Build in Texas:

Childress is cheapest to place to build at -14% below the national average, followed by Wichita Falls at -9% below the national average. The third cheapest place to build a house is Brownwood and Texarkana at -8% below the national average, followed by El Paso and Lubbock and Tyler at -7% below the national average. The fifth cheapest place to build is McAllen and San Angelo at -6% below the national average, followed by Waco and Woodson at -3% below the national average.  The seventh cheapest place to build a home is Abilene and Amarillo at -2% below the national average. Construction costs in Del Rio resemble the national average. Arlington and Longview are 1% above the national average. Costs in Fort Worth and Palestine are 3% more than the national average. Greenville is 3% more than the national average.

Expensive Places To Build in Texas:

If anything between 5% and 10% is considered expensive, then the following metropolitan cities fall under this category: Building a house in Dallas and Gidding will cost you 6% more than the national average, whereas Plano is 7% above the national average. Building costs in the cities of Bryan, Lufkin and San Antonio are 8% more than the national average. You will pay 10% more than the national average to build a private dwelling in Midland.                         

More Expensive Places To Build in Texas:

If anything between 10% and 15% is considered more expensive, then the following cities fall under this category: Building a home in Austin and Victoria is 12% more than the national average.

Very Expensive Places To Build in Texas:

The most expensive places to build a house in Texas are those 15% above the national average. Bay City is the most expensive place to build a house in Texas at 39% above the national average, followed by Huntsville and Houston at 26%. In third place is Galveston at 24% above the national average. You will need to pay 18% more than the national average to build a house in Beaumont and Corpus Christi.

Texas State Average Costs:

Private home building costs in the state of Texas are 5% higher than the national average. Building cost rates in the metropolitan areas of Dallas and Giddings are closer to the Texas state average.


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