Builder Contracts

Allowances and scope

The contract decides which numbers are fixed and which float

A builder contract does two jobs. It fixes a price, and it defines what that price is a price for. The second job is where the disputes come from. Census measures the contract price for a contractor-built house at a 2025 median of $404,000, and the table states that the figure excludes the value of the improved lot¹. Your contract needs the same clarity about its own boundaries.

It also needs a definition of size. Census measures houses by finished area, and the median single-family house completed in 2025 finished at 2,142 square feet². Per square foot, the 2025 median contract price was $171.57 on the same land-excluded basis³. If your contract quotes a per-square-foot rate, define whether garages, porches, unfinished basements and attic space count, and settle it before the number is agreed rather than after.

The part nobody publishes is what allowances and change orders typically cost. No published series on either was available for this guide, so treat any typical allowance figure you are shown as the builder's own working number. What can be sourced is what the finish lines average nationally, and those averages are the reality any allowance eventually has to cover.

Six clauses worth arguing about before you sign

These are the clauses that decide whether the price you agreed is the price you pay, and each one can be settled with a sentence.

State whether the land is in the price

Census reports a 2025 median contract price of $404,000 excluding the improved lot, and a 2025 median sales price of $417,400 including it¹⁴. Those two numbers sit close together and mean different things. Your contract should say in one sentence which basis it uses, and what it assumes about the site.

Define finished area in writing

Census measures finished area, and reported a 2025 median of 2,142 square feet for completed single-family houses and 2,194 for houses sold². Contracts often quote a per-square-foot rate without defining the measure. Write down whether garages, porches, unfinished basements and attic space count, and how the total gets verified.

Get the allowance schedule in dollars

Allowances are placeholder budgets for items you have not chosen yet. NAHB's averages show what those items run: cabinets and countertops $19,056, flooring $15,388, interior trims and doors and mirrors $12,920, painting $11,150, plumbing fixtures $7,922, appliances $7,499 and lighting $5,392⁵. Ask for each allowance as a dollar figure, not a description.

Fix the change order mechanism, not the price

No published series on change order frequency or cost was available for this guide, so nobody can tell you what to budget. What you can control is the process: who may authorise a change, in what form, whether price is agreed before work starts, and whether the schedule moves with it. Put all four in the contract.

Assign every fee by name

NAHB's site work averages include building permit fees of $7,640, impact fees of $6,367 and water and sewer fees plus inspections of $6,260, which total $20,267⁵. Those are national averages from 41 usable responses, not a quote for your jurisdiction. Name each fee in the contract and say who pays it.

Say what happens when the site surprises you

Foundations averaged $44,748, with $43,002 in a single line covering excavation, foundation, concrete, retaining walls and backfill⁵. Rock, fill and groundwater all land there. A contract silent on unforeseen site conditions leaves that risk unallocated, which means it gets argued about with the excavator already parked on your lot.

Interior finishes, average$103,391, the allowance zone

Published change order dataNone from any source

What does it cost?

No source publishes what allowances typically run, what change orders typically cost, or how often either moves a contract price. This guide has none of those figures and will not estimate them. What is published is the size of the finish budget an allowance schedule sits inside. NAHB's 2024 survey puts interior finishes at $103,391 on its average house, out of a total construction cost of $428,215, itself 64.4 percent of a $665,298 sale price⁵.

The individual lines are the ones you will be asked to choose: cabinets and countertops $19,056, flooring $15,388, interior trims and doors and mirrors $12,920, painting $11,150, plumbing fixtures $7,922, appliances $7,499, lighting $5,392 and fireplace $2,378⁵. Outside the walls, driveway averaged $9,635, landscaping $9,269 and outdoor structures $4,722⁵. Every one is a national average from 41 usable responses out of 4,000 builders emailed, carries no geographic breakdown, and NAHB advises against comparing across years. For price anchors, the 2025 median contract price was $404,000 excluding the lot, and the median was $171.57 per square foot¹³.

Contract price figures are Census Bureau Survey of Construction 2025 medians that exclude the value of the improved lot, and every line-item figure is a national average from NAHB's 2024 survey of 41 usable responses; no allowance or change order figure appears here because no source publishes one.

Hiring

How to hire when the contract is the deliverable

1

Who does the work

The signature on your contract may belong to a company that subcontracts nearly all of the work. That is ordinary, and it matters for the contract, because performance, warranty and scheduling all pass through parties you never met. NAHB groups the job into eight stages, the largest being interior finishes at $103,391 and major systems rough-ins at $82,319⁵. Ask which stages are self-performed.

2

What pros will ask

A builder drafting a contract will want final drawings, a written specification list, your selections or the allowances standing in for them, your lot information, and your lender's draw requirements. They will ask you to sign off on plans before pricing hardens. The more selections you make before signing, the fewer allowances you carry into the job.

3

What to check before signing

Check the price basis, the definition of finished area, the allowance schedule in dollars, the change order procedure, the fee assignments and the site conditions clause. Confirm the payment schedule matches the work: NAHB's stage costs run from $8,835 in its other category up to $103,391 in interior finishes, so equal monthly payments do not track the real spend⁵.

Contract questions, answered straight

How much should I budget for change orders?

No published series on change order cost or frequency was available for this guide, so any percentage you are quoted is somebody's rule of thumb rather than a measurement. What you can do is remove the need for them. Make selections before signing rather than after, convert allowances into fixed prices wherever the choice is already made, and require written pricing and written schedule impact before any change is authorised. Ask what the builder charges to process a change order, in dollars, and put that in the contract.

What is a fair allowance for kitchen cabinets?

No source publishes a fair figure, and it depends on what you choose. The one published reference point is NAHB's national average for cabinets and countertops together, $19,056 on its average house⁵. That is an average of what 41 builders reported, national only, with no geographic breakdown and no confidence interval published. Use it as a sanity check on an allowance that looks far below it, then price your actual selections at a supplier before you sign rather than after.

Should the contract be fixed price or cost plus?

No published data compares outcomes across the two, so treat a strong claim in either direction with suspicion. What matters more is that whichever you use is written precisely. A fixed price with vague allowances is not fixed. A cost-plus contract without a stated fee, an audit right and a not-to-exceed figure is open-ended. Either way, the Census contract series is a reminder of the first question any contract must answer: is the land inside the number or outside it¹.

Can I negotiate the contract, or is it take it or leave it?

The published market context suggests the conversation is worth having. NAHB reported builder confidence at 34 in July 2026, with 37 percent of builders cutting prices that month by an average of 6 percent⁶. Census and HUD counted 9.3 months of supply of new houses in June 2026, against 9.0 a year earlier⁷. Those are national figures, not a read on your builder. Terms are often easier to move than headline price, so push on allowances, the change order procedure and the site conditions clause.

Who pays the permit and impact fees?

Whoever your contract says, which is precisely why the contract has to say. NAHB's national averages are building permit fees $7,640, impact fees $6,367, and water and sewer fees plus inspections $6,260, a total of $20,267⁵. No jurisdiction-level table was available for this guide, and these fees are set locally, so the averages give you scale and nothing more. NAHB separately estimates that $84,939 of regulatory cost is imposed during construction on a new single-family home⁸.

Sources

Where these facts came from

Every figure on this page was read out of the page linked below. We do not cite cost aggregators.

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