In this article:
Price per square foot is a way to measure a home's value relative to the size of its living space. While the simple metric doesn't give you the full picture of a home's condition or whether it's the right fit for you, it can be useful in comparing similar properties.
Here's why price per square foot is important when evaluating homes and how to calculate it.
What Is Price per Square Foot?
The price per square foot of a home is a valuation tool used to assess the value of comparable homes, particularly the living space.
For example, while a large yard, a wraparound porch, a spacious garage or an unfinished basement may contribute to the value of a home, those features aren't included in the square footage of the home.
The only two variables in the formula for price per square foot are price and square footage, but there are several factors that influence the value of a home, such as the home's location, condition, lot size, the number of bedrooms and bathrooms and improvements.
Why Does Price per Square Foot Matter?
Price per square foot is an important tool for homebuyers, as it can be a starting point for evaluating comparable homes. Two homes that are going for the same purchase price may have different prices per square foot if one has more living space than the other.
While it may be tempting to simply determine that the home with the higher price per square foot is overpriced, there may be other factors to consider:
- The home may have more upgrades.
- The home may have a larger yard or more attractive exterior features.
- The home may have a garage rather than a carport.
- The home may have features, such as an unfinished basement, that aren't included in the square footage.
If you're not sure yet where you want to live, you can also use the average price per square foot of different neighborhoods to see how they compare.
How to Calculate Price per Square Foot
To calculate the price per square foot, you'll need two figures: the square footage of the home's living space and the sales price.
- Find the square footage on the listing; note any unfinished areas and leave them out of your calculation.
- Find the sales price on the home listing.
- Divide the sales price by the square footage.
It's important to note that many listings may include the price per square foot, so you probably won't need to calculate it on your own.
Price per Square Foot Example
Let's say you're looking at a 2,000-square-foot home with a sales price of $500,000. To calculate the price per square foot, you'll use the following formula:
Asking Price / Square Footage = Price per Square Foot
or
$500,000 / 2,000 = $250
The price per square foot of the home is $250. Now let's say you want to compare that with three other homes in the area. You'd simply use the formula for each of the comparable homes:
| Price per Square Foot Comparisons | ||||
|---|---|---|---|---|
| Home 1 | Home 2 | Home 3 | Home 4 | |
| Sales price | $500,000 | $550,000 | $525,000 | $490,000 |
| Square footage | 2,000 sq. ft. | 2,300 sq. ft. | 1,900 sq. ft. | 2,100 sq. ft. |
| Price per square foot | $250 | $239 | $276 | $233 |
Median Price per Square Foot
The median price per square foot in the U.S. is $222, according to December 2024 data from the Federal Reserve Bank of St. Louis. This refers to the middle value of all homes on the market—not the average.
If you're looking for the median price per square foot for a specific county or city, you can use websites like Realtor.com or Redfin.
In addition to the average price per square foot, you can use the median price per square foot in multiple areas. The median price can be particularly helpful as it's not skewed by individual prices that are much higher or lower than others in the neighborhood.
Prepare Your Credit to Buy a Home
If you're planning on buying a home in the near future, it's important to get your credit ready for the mortgage process.
With Experian, you can get access to your Experian credit report and FICO® Score☉ for free. These resources can help you gauge your creditworthiness and give you insights into improvements you can make to increase your credit score.
You can also get real-time alerts when changes are made to your credit report, making it easy to monitor your credit before and during the mortgage approval process.