To Buy or to Build? The Pros and Cons of New Construction vs. Existing Homes

In a housing market where inventory is snatched up quicker than you can say “Let’s make an offer,” finding the home of your dreams can take time. Perhaps the thought has crossed your mind to build your home instead of buy it, which could be a viable solution. But is one option better than the other? Both previously owned and newly built homes come with their share of pros and cons, and it all comes down to which option better suits your wants and needs. Here’s what you need to know as you weigh out your decision.

A Quick Comparison Graphic


Median sale price of a newly built home[1]  As of September 2021

  • 408,800

Median sale price of existing home[2]

  • 352,800


Typical home purchased* in 2020[3]

  • 1,900 square feet
  • 3 bedrooms
  • 2 bathrooms
  • Built in 1993

*85% of homes purchased in 2020 were previously owned.

Typical new home built in 2020[4]

  • 2,261 square feet
  • 3 bedrooms
  • 2-3 bathrooms

The Pros of New Construction

  • Get exactly what you want. When you’re building a custom home, you can design everything to suit your preferences, from the building materials to the square footage to the layout. Even with a contractor-built home, you typically get to choose from a set of floorplans and fixtures, allowing you to personalize the home to your tastes. Imagine having a move-in-ready home that already has the appliances, cabinets, paint colors, and lighting fixtures that you want.
  • Fewer repairs. In a brand-new home, everything from the roof to the appliances are brand-new, too. This means you’re unlikely to need any major repairs for a while, saving you money and providing you peace of mind. Many new homes also come with warranties on appliances or even the home itself, which can protect you from major repair costs for several years.
  • Energy-efficient. Newer homes are built with a tighter envelope — that is, all the components that help to separate your home from the elements, such as windows, doors, roof, walls, and foundation. A tight envelope improves energy efficiency and indoor air quality, keeping your comfort levels high and your utility bills low. New appliances are also more energy-efficient than older models.

The Cons of New Construction

  • Higher price. The cost of a new home varies widely depending on your location, the size, the finishes you choose, and whether you’re building a custom home or buying one that’s already built. But in general, a new home will cost you more than an existing one. According to HomeAdvisor, expect to pay

Supply chain issues and soaring lumber and material prices resulting from the pandemic have caused new-home prices to skyrocket, adding approximately $36,000 to the cost of a single-family home.6 If you buy new right now, expect to pay a premium.

  • Long wait times. It normally takes about seven months for a builder to complete a home, and even longer if you’re working with a contractor on a custom build.7 But weather conditions and changes to the design plans mid-build can (and often do) delay the project. During the pandemic, it’s taking even longer, with increased wait times for materials and permits, not to mention the lack of skilled laborers. You also have to budget in the time it takes to draw up plans and get financing approved. In short, know that it will take a long time and that unforeseen delays are a near certainty.
  • Location & landscaping. The pandemic prompted a sudden move out of cities and into less populated areas, so the fact that many new homes are built in suburban or exurban locales might not be a downside for you. But it could mean longer commute times to work, school, and other conveniences. If you do find a new home in the city, you’ll likely have a smaller lot size and less outdoor living space. In addition, many builders do not include landscaping in the project, leaving you to shell out thousands of dollars to complete your yard and add curb appeal. And it will take years for those trees and shrubs to mature, so you won’t have the sun- and heat-blocking advantages that older trees provide.

Good to know: Construction loans require higher credit scores and larger down payments than a traditional mortgage. Talk to your Loan Officer to determine what you need to qualify.

The Pros of Existing Homes

  • Quicker buying process. In this market with minimal inventory and strong competition, it’s difficult to pinpoint how long it might take you to find a home. Your house hunt could last weeks or even months. According to Zillow, it takes an average of 4.5 months to shop for a home.8 Once you’ve gone under contract, however, the average time to close on your mortgage is about 50 days, give or take a few.9 So while it could take several months from start to finish, you won’t be at the mercy of the builder’s timeline, which means fewer uncertainties and a more predictable move-in date.
  • Community & charm. Existing homes tend to be in more established neighborhoods where you’ll find a stronger sense of community and amenities. Access to parks, schools, and grocery stores aren’t just convenient, they can increase your satisfaction with where you live. These amenities are also attractive to potential homebuyers,3 which could boost your resale value and help your home sell quicker in the future. Plus, if you’re trying to avoid the cookie-cutter aesthetic, you’ll have a lot more architectural styles to choose from if you buy an older home, from Tudor to Victorian to Crafstman and beyond.
  • More affordable. As of September 2021, the median sale price of an existing home was $56,000 less than a newly built home. So from a sticker price perspective, buying resale might be cheaper. And prices can be more easily negotiated (though in a hot seller’s market, expect to pay above asking price), whereas builders are less likely to budge on the price. In fact, if material costs go up, the builder could increase the price of the home, even after you’ve gone under contract. This could jeopardize your financing, or you would have to get approved for the higher amount.

The Cons of Existing Homes

  • Upfront repairs. A home that’s been lived in previously is going to have some wear and tear that needs to be fixed, along with older appliances that may need replaced before you move in. Installing new carpet, painting the walls, and replacing the HVAC are major expenses that you’ll need to budget for ahead of time. Even if you don’t need to replace these right away, anticipate repair and maintenance issues to arise sooner than they would in a brand-new home.
  • Less energy-efficient. Along with the older appliances and systems that are common in existing homes, you may also have less efficient windows or insulation. As a result, your home may use more energy to operate, which hikes up your utility bills. This can also affect your indoor air quality, which has a direct impact on your health and comfort at home.10 Of course, you can remedy this with some energy-efficient upgrades, but that increases your total costs.
  • Might require a remodel. In an existing home, you inherit the floorplan. If you want to redesign the kitchen and living room to have an open layout, it may require major renovations. Then there are aesthetic upgrades such as replacing outdated cabinets or removing the pink 1950s wall tile in the bathroom. Making improvements takes time, planning, and money. The average cost for a minor kitchen remodel is around $26,000,11 and the same delays and price hikes that are impacting homebuilding right now are also impacting remodeling activity.

As you can see, there’s no right or wrong choice. Whether you buy or build, you have to decide which advantages outweigh the disadvantages. Once you’ve chosen a path, take the first step to line up your financing. This will ensure you know what you can afford and will help you plan and budget for any upfront costs.

Whatever you choose, we’re here to help you find the best financing option for your next dream home. Contact a loan officer near you or start your application today!

[1]U.S. Census Bureau, HUD, Monthly New Residential Sales, September 2021.
[2] National Association of Realtors® (NAR), Existing-Home Sales, September 2021.
[3] NAR, 2021 Home Buyers and Sellers Generational Trends Report.
[4] U.S. Census Bureau, 2020 Characteristics of New Housing.
[5] HomeAdvisor, “How Much Does It Cost To Build A House?”
[6] National Association of Home Builders (NAHB), “Skyrocketing Lumber Prices Add Nearly $36,000 to New Home Prices,” April 2021.
[7], “Average Length of Time from Start to Completion of New Privately Owned Residential Buildings.”
[8] Zillow, “How Long Does it Take to Buy a House.”
[9] ICE Mortgage Technology, Origination Insight Report, August 2021.
[10] Environmental Protection Agency (EPA), “Introduction to Indoor Air Quality.”
[11] Zonda, 2021 Cost vs. Value report.

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