Is Building a House More Expensive than Buying a House?

Build a Home

You’ve always talked about having your own home built. You like the idea of picking the floor plan, being able to choose the finishes in the house, and being able to be a part of the design. It’s your dream home, so why shouldn’t you be able to make your home how you want? Of course, you’ve probably always shied away from having your home built. It’s just too expensive. Isn’t it?

Building a home certainly isn’t a cheap undertaking. But just because a house that works for you is cheaper, doesn’t mean you should completely disregard having a house built. The National Association of Home Builders reported that, in February of 2015, the average price for a new house was $275,500 and the average price of an existing house was $204,200. When you look at those two numbers, you might start to despair. That’s a pretty big difference in cost after all.

Benefits of Building

You shouldn’t give up on you dream of building your own home just yet, though. Home prices are continuing to increase as mortgage rates remain low, and that just might give you the edge you need. Homebuilders still need work, so they can potentially offer some solid discounts to build a home.

  • Discounts. You’re not negotiating with a homeowner. You’re negotiating with a homebuilder. The builder tends to have more freedom when it comes to offering a better price because they know the cost of materials and labor. Even if you can’t get a cheaper price, you might be able to negotiate upgrades into the cost. Get those hardwood floors and granite countertops you’ve always wanted, baked right into the cost of the house.
  • It’s All New. If you buy an older home, you might find hidden costs down the road. While the risk is still present in a new construction home, you’ll be able to watch the building process. Plus, you’re getting exactly what you want. You won’t have to add more money on top of your mortgage to fix up that existing house.
  • Design. This is probably the biggest benefit. You pick the layout that you want. You control the design of your home. You aren’t stuck with a bathroom next to the kitchen, or a master bedroom above the garage.
  • Invisible Benefits. A new construction home can have some benefits that aren’t readily apparent. This can be as simple as having enough outlets where you need them, or becoming part of a brand new community.

Benefits of Buying

There are some solid benefits to buying an existing home as well. The most obvious benefits are that the cost will most likely be lower, and you’ll be able to move much sooner.

  • Delaying Upgrades. If the existing home does need upgrades, you can take your time. They don’t have to be done right away, so you can spread the cost over the time that you’re living in the house.
  • Moving Quickly. Perhaps the biggest benefit is that you will be able to move in almost immediately after closing. When you build, it can take up to six months before your house is finished.
  • Knowing the Neighborhood. Because the existing house is already in an existing neighborhood, there won’t be any guesswork involved. You can check out the neighborhood ahead of time to see if it will be a good fit.
  • What You See is What You Get. With an existing house, the floor plan already exists. Being able to actually see it can be easier than trying to visualize what a new construction home will look like. All you have to base it on is the blueprint.


There are disadvantages to each option. When you’re building a house, it can take a long time. This might mean having to move multiple times and might involve temporary housing and storage. Depending on your price range, you might also be limited on the style and layout of house that you can afford.

When buying a house, you might have to deal with upgrades. And that cost isn’t included in your mortgage. It’s extra. That can be an extra expense you don’t want to deal with. With new construction, the “upgrade” cost is already included. When you buy a house, you’re also stuck with the layout. It can be impossible or costly to change.

Making Your Decision

In the end, only you can decide if you should buy a home or build a new one. The best way is to compile a list of all the benefits and disadvantages that can come with either option. Knowing all of your options will help you make the best decision. If you really want to build your own home, you might be surprised to find that it’s more affordable than you originally thought.

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