There are currently a few builders running advertisments in the local papers (Doings & Suburan Life) that claim to be able to build a home "on your lot" for $799,000. If you read the ad carefully you will see that it is is NOT a "top of the line" home either in design, features or finish.
The things that they will tell you when you ask for details (because they leave out this of the ads) are what will be "upcharges" and from things like appliance selection and light fixtures to deep basements with utilities located to allow for full height finished space, 4 sides of face brick and hardwood doors and even the landscaping it is pretty clear that when the budgeting for new construction of over 4000 sq ft you STILL need to plan on $225/sq ft as being a pretty solid starting point for the costs of "good" quality and closer to $250/ for "better" quality.
Even at theses price points DO NOT expect to get all baths done up in stone counters and tile, "designer" brand kitchen cabinets, "exotic" hardwood floors or any of the other things that are truly "top of the line".
Material costs have not fallen and the supply of skilled labor is not expanding.
Existing construction is generally selling below replacement costs ...