November 29, 2022

Is It Cheaper to Build a House - Build VS Buy

When you are looking for a new home, there is no doubt you would love to have a brand new, customized house. The only problem is the cost. Customized things are more expensive and take longer time to get, as a rule. Let us see if it is true, and consider the advantages and downsides of buying and building a new house before you head off to the building supplies store or rush to sign a home purchase agreement.

Pros of building a house:

  • Customization. First of all it is, of course, customization. What on earth could be better than a house designed and created according to your ideas, requirements, and needs of each family member, and with the use of the materials you like? Sure you picture in mind a house of your dream and want to see it for real just like you imagined.
  • Newness. It is a big advantage as well. Everything smells with freshness and looks new and shining, just the way you imagined!
  • Less maintenance. Since everything is brand new, there is no need for maintenance and repair and no maintenance costs are expected in a few years. New appliances normally come with guarantees, and this also will save your money.
  • Resale value. When you decide to move out your house will have better resale value. When your house is 5 years old it is not that worn out like the one 30 years of age.

Cons of building a house:

  • More time and effort. It’s obvious that building a new home will take more time, stress and effort. Looking for a proper plot of land, working on the layout, interior design, looking for healthy materials, and so on will often take longer time than expected. Delays are possible too.
  • Lots of costs. When you buy a house, basically you pay for the house and move in. When you build a house, be ready to consider land plot cost, demolition costs (if the plot is built up), design costs, materials costs and construction costs.
  • Contingency costs. It is difficult to predict all the expenses that may occur during the whole process of construction of a new house. If you draw up your budget judging by the price tags of the materials and appliances you plan to purchase, keep in mind that the costs might increase due to unexpected upgrades and unforeseen problems.

Judging by the above it seems obvious that constructing a new house is more cost consuming than purchasing an existing house.

Nevertheless, it will be fair if we see the disadvantages and benefits of buying a house.

Pros of buying a house:

  • Faster move-in. It is one of the main advantages when you can move into your new home very soon after the purchase is done. It works well for those who are in a rush of relocation.
  • Cost. You will be able to choose a house within your budget and will have a more clear idea of the final cost of your purchase, taking into account all the upgrades required. Moreover you can do renovation works as time and your budget allows.
  • Location. A house with some years of history will usually be located in a developed area closer to a city. This means the area will more likely have a better transportation system, closer to schools, work and other social infrastructure.

Cons of buying a house:

  • Additional costs. Sometimes old houses require repairs or you might want to upgrade and renovate the worn out house utilities or interior design. This downside leads to additional costs.
  • Compromise. It is a perfect match when the house of your dream meets your budget. But more often when you find a house within your price range, you have to compromise like having a smaller size of the kitchen or having one fewer bedroom.
  • Summary. Judging by the comparison above, you can see there are a lot of things to consider while deciding whether to build a new house or buy an existing home. Purchasing an existing house will give you a more clear understanding of its value, but it may not correspond to the image of the house you dreamed of.

When you choose to build a house by your own project and design, you get what you want but it takes longer time and might have unexpected expenses.

So what is cheaper in the end?

When you check and compare the build prices to average purchase prices, you will see that buying an existing house is normally less expensive.

According to the recent data obtained from the National Association of Home Builders, the median cost of an existing home is around $415,000, and the median price for the newly-built home is nearly $450,000.

The expenses for a new house include the cost of a plot, land works, inspections, permits and other associated costs. However if you already own a plot for construction, you will have a significant drop in costs.

The expenses for an existing house include on the whole the actual price of the house, which is both land and the house), and some renovation expenses if needed.

Look through the costs of building a house and check if you can save some money doing some of the work yourself:

Construction Costs

Price Range

Plot of land

~$3,000 –$200,000

House demolition (of an old house)

~$5,000 –$12,000


~$4,000 –$25,000

Plumbing installation services

~$7,000 –$15,000

Electrical wiring

~$20,000 –$30,000


~$5,000 –$12,000

Exterior painting

~$2,000 –$4,500

Interior finishing

~$50,000 –$180,000


~$3,000 –$10,000


Note that all the price ranges above are average estimates and may vary by state, location, quality of materials, building company, etc.

What about the components of the cost of an existing house?

Name of the cost

Expected expenses

Down payment (20%)


Closing costs (~3-6% of loan amount)

~$12,000 –$25,000

Mortgage insurance

Private mortgage insurance could be between 0.58 to 1.86% of the loan amt. However, n/a if you pay 20% or more

Property tax

The average annual property tax is ~$2,500, varies by state

Homeowners insurance

The average cost of homeowners insurance is ~$2,800 a year, but rates vary by state

Home repairs

Depends on the condition of the house


You can see that both options consume a lot of money, and the building option also requires a lot of time, effort and control.

Weigh up all the pros and cons and make your right choice.

No matter what kind of journey to your dream house you choose, you can always rely on our experts. We wish you good luck and a friendly neighborhood.