The Cost to Build a House in California (2024)

While the real estate market in California has cooled compared to the days of dozens of offers per property, buyers are still dealing with low supply issues, according to Danae Aballi, a real estate agent who has worked with over 78% more single-family homes than the average agent in Costa Mesa, California.

If buyers can’t find a turnkey home, they sometimes decide the best bet is to “build from the ground up,” said Aballi. So, what is the cost to build a house in California?

“It feels like the conversation comes up in almost every transaction,” Aballi says.

In the more expensive markets around Southern California, it’s common for buyers to “scrape and rebuild” — buying a property for the land where a large part of a property’s home lies, tearing down the existing home, and building new, she said.

Additionally, skyrocketing insurance rates in California and other markets have led to homebuyers looking to save money wherever they can, opting for new construction homes.

53% of California agents say they are seeing an increase in home sales being canceled due to rising homeowners insurance rates, with 16% reporting “significantly more cancellations,” according to HomeLight’s Top Agent Insights Report for the end of 2023.

As supply continues to shrink, agents are also increasingly urging buyers to consider new home construction. According to HomeLight’s report, 39% of agents are more heavily promoting the sale of newly constructed homes.

“In California, it has been a bigger hurdle, even more so than interest rates. While I’ve always had insurance brokers at my fingertips, it’s been a big hurdle, especially this year. More and more companies are pulling out of California,” says Audrey Carlos-Quiggins, a California agent with seven years of experience.