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How Much Does It Cost To Build A House In Colorado? [Average Home Construction Costs]

How Much Does It Cost To Build A House In Colorado? [Average Home Construction Costs]

One of the most common housing questions for residents of Colorado or those looking to move to Colorado is ‘How much does it cost to build a new home?’

The average custom home in Colorado costs approximately $225 per square foot to build. Factors such as location, lot size, and the selected finishings and selections can influence this number up or down.

Want to dig into the cost specifics? Read on and let’s get going!

Home Construction Cost Factors

Building a custom home is not something that can be easily estimated because so many factors can affect your final price. Let’s go over the 6 key factors that can impact your bottom line.

Factor #1 – Location

Where you build your home matters when it comes to the cost!

Building a custom home in Denver, Colorado Springs, or Aspen will cost you more than if you were planning to build in Limon, CO.

Never heard of Limon? That’s why it’s cheaper!

The closer you are to metro cities or seasonal attractions will increase the cost because you are in a more desirable area. Land and utilities may be more expensive.

Additionally, the condition of your lot and how easy it is to get there can also impact the price. Flat lots with little to no tree removals will cost you less than mountainous lots with no developed access roads.

Lastly, if you are in a very remote area with no nearby utilities, you may need to pay more to connect to infrastructure like gas lines, city water, or electricity.

All of this will add to your construction budget!

Factor #2 – Lot size

In the greater Denver metro area, your average cost for 1-3 acres of land can cost between $200,000 to $500,000. This is often the cost for a pre-built tract home!

The cost of land will dramatically impact the cost to construct a home. If you inherited land for free, that’s great!

If you bought land as an investment years ago and are just now thinking of building on it, that’s great too!

If you just purchased a few acres or you bought 100 acres, you will need to add this cost to any home builder’s estimate.

If you have a land loan for your lot purchase, your construction loan will pay off your remaining balance and that will be added to your new construction loan and will be part of your final mortgage.

Learn more about how to buy vacant land here!

Factor #3 – Size of your Home

The average cost of a custom home in Colorado ends up around $200 per square foot.

This amount is for your entire house plan including the basement no matter if it is finished or not. So if you are building a 5,000 sq. ft. home and finishing 4,000 of it, you could expect to end up around the $1,000,000 mark.

The reason for this is even if you don’t finish the basement, they still have to complete the foundation, add rough-ins (plumbing, HVAC, electrical), install windows, exterior framing, and the support for the main level.

Ranch-style home designs can also cost more than 2-story homes. (See Why here)

The bigger the home or, the more complex the home, the more you can expect to pay. More materials equal more money!

More complex features like rooflines will cost more in labor, architecture, and engineering.

Factor #4 – Home Finishes and Selections

Once you have your land and home plans, you may think your budget is locked in.


Making all of those selections for what goes into your home is where you can easily blow your budget. I would highly recommend working with a design team to help you stay within budget.

Selections include everything that goes into your home from the flooring materials and countertops to door knobs, plumbing fixtures, and light switches.

It’s easy to bust your budget here because you may go over by a few hundred dollars here and a few hundred dollars there and before you know it you are $20,000 over budget!

Pay attention to the selections that are included in your quote from your contractor. They may already include an allocation for certain selections, or they may leave them open-ended and not include them.

This can be dangerous 🙂

A home with custom cabinets, hardwood floors, and the highest level quartz will cost more than a house with semi-custom cabinets, carpet, and level 2 granite.

Factor #5 – Contractor Fees

Contractors’ fees will be included in your approved cost to build and will need to be spelled out prior to gaining a construction loan.

I recommend you review our ultimate guide to picking a home builder before you sign any contract.

You should have an understanding of what kind of fees your contractor will charge. Is it a percentage of the total cost to build? Will there be any fees for change orders? When will contractor payments be made?

Generally, you can expect your contractor fees to be around 10% of your cost to build.

And yes, you can try to negotiate this rate.

Factor #6 – The Economy

Finally, the last key factor to home building costs is the economy.

This article is being written in December 2020. We are in the middle of a pandemic, and a real estate boom! A lot of people are moving, building, refinancing, or renovating.

Borders are shut down, supply lines are inconsistent, and shipping is delayed.

Because of all of these factors, some building materials have increased in price. Lumber is more expensive due to increased demand and shipping delays. Contractor labor is harder to come by, and your mom-and-pop companies may have gone out of business.

Your local economy can impact your cost to build. There is not much you can do about these cost impacts, but you can prepare yourself as best as possible.

Try to shop early, and speak to experts about their price forecasts!

For example, If a lumber yard tells you they expect lumber prices to increase in the future, maybe you can pre-purchase the lumber now.

Is it cheaper to build or buy a house in Colorado?

It is normally cheaper to buy an existing home than to build a custom home.

This is because when you buy a home, you are purchasing it as is. A new custom home requires you to purchase the lot, build the home, and pay for any fees like water tap fees.

Take it from me, water tap fees can be expensive! See why they are so expensive here.

Even though you may be able to purchase an existing home for cheaper than building one, you’ll want to take into consideration any cost of renovations you may plan to make.

When you start planning for renovations, you may start to see the balance shift to building a new home being less expensive.

Search the market and tour a few local homes before deciding to build. It can’t hurt. If anything, you’ll learn what you don’t like!

What is the cheapest type of home to build?

The most cost-effective home to build is a two-story home. You get more living space for the same amount of foundation.

It is less expensive to build up than to build out.

Ranch houses are more expensive because their total square footage is spread across a single floor rather than multiple. This leads to increased construction costs due to having a large foundation, roof, and material costs.

In addition, the simpler the foundation footprint, the cheaper it will be.

Have you ever noticed that most tract homes are pretty close to a full square or rectangle?

They might only have a bay window that bumps out. This is because a simpler foundation is cost-effective.

You may also notice that tract homes have simple roof lines and will very rarely incorporate any circular design features.

So what’s the cheapest type of house to build? A two-story home with a simple foundation and roof line. In the home-building world, It’s okay to be square.

What is the most expensive part of building a home?

I can’t believe I made it this far into an article before answering, “It Depends!”

For the average home, framing is the most expensive part of building a house.

Framing uses the most materials and requires the most time and labor to complete. Think about all of the intricate details of each room that has to be built.

Framing is the process of building out the overall structure of the home. It includes the exterior, floor joists, window and door headers, walls, trusses, and roofline.

This is not an area to cut costs!

Don’t try to save a few pennies by hiring unlicensed contractors, skipping inspections, or buying poor-quality materials. It will cost you double if you have a structural problem down the road.

However, when it comes to the cost of finishings inside the home – the kitchen and master bathroom tend to be the most expensive rooms.

This is due to them often having some of the nicest finishes inside a home, as well as the addition of multiple accessories or features not found in other parts of the house.

Specific to the kitchen, the appliance package and large countertop areas contribute to its increased cost. Similarly, master bathrooms often have extra features like soaking tubs, walk-in showers, and added tile work.

Conclusion on the cost to build a house in Colorado

Building a custom home in Colorado, on average, will cost you around $200 per square foot.

These costs will be determined by your location, lot price, labor, and material costs, your selected contractor, the level of your selections and finishes, and the economy.

We recommend meeting with a few contractors or real estate professionals prior to making your decision to ensure you understand your unique market.

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Monday 15th of January 2024

I appreciated this article.

Lindsay Reed

Hi, I'm the founder of! I created this website to be a resource for everyone who wants to make the best home possible.