Building a house vs. buying

Buying an existing house

The process of buying an existing house typically begins with finding a real estate agent and searching for properties that fit your needs and budget. Once you find a home you like, you’ll make an offer and, if accepted, move into the closing process, which includes inspections, appraisals and finalizing your mortgage paperwork. This process can be much quicker than building a home, often taking just 30 to 60 days to complete.

Financially, buyers need to consider not only the down payment and monthly mortgage payments but also other expenses like closing costs, property taxes and homeowners insurance. Depending on your situation, there are different mortgage options available, including conventional loans, FHA loans and VA loans, each with its own eligibility requirements and terms.

In addition to expected expenses, buyers should be prepared for hidden costs that may arise. Even after a thorough inspection, unexpected repairs or upgrades could be needed shortly after moving in. These could include replacing an old water heater, fixing plumbing issues or addressing roof damage. It’s wise to have an emergency fund set aside to cover these surprise expenses.

Buying an existing home: pros

Buying an existing home has many benefits, including the following:

• Less expensive: According to New Jersey real estate investor Jonathan Faccone of Halo Homebuyers, construction costs have increased dramatically in the last few years. Because of this, the median price of existing homes is generally lower than new builds.
• No requirement to purchase land first: It's just as difficult to find conforming, buildable lots as it is to find builders with affordable pricing on new homes, Faccone said. When and if you find a lot you like, prices could be much higher than buying an existing home.
• Higher quality: New-home builders have had to make cuts to keep up with rising building material costs over the years. "The way to do this in the development industry is to find cheaper labor," Faccone said. "Unfortunately, quality will inevitably suffer when you have to pay cheaper labor prices."
• Convenience: Buying an existing home can be more convenient and faster than building a new home. Since the house is already built, you don't have to worry about rising construction costs, renovation overages, delays due to supply chain issues or other hiccups that can come with building.
• Mature landscaping: Many existing homes have mature landscaping, meaning you won't have to grow grass or plant trees from scratch. That can make the home look nicer and save you money.
• Fewer hidden costs: Building a home from the ground up comes with a range of added expenses you may not have thought about. By contrast, existing homes tend to have a lot of the "extras" already taken care of. For example, many existing homes have a driveway poured and built-in shelving installed.

Buying an existing home: cons

While buying an existing home can be considerably more convenient, there are some potential downsides.

• May require updates: Purchasing an older home may mean compromising on things like the floor plan or available storage. You may need to renovate major spaces, including the kitchen and bathrooms, and make pricey upgrades and repairs, like a new HVAC system or roof.
• Hidden repairs: You'll get a home inspection when you purchase an existing home, but it may not find every issue. You may find yourself facing unexpected repairs as a result.
• Less energy-efficient: Older homes tend to be less energy-efficient, both in how they’re heated and cooled and in exterior components like windows and doors. This could lead to higher energy bills or the need to pay for upgrades to improve energy efficiency.
• Lack of customization: You can’t customize an existing home the way you can a new build. "You're limited to whatever features and amenities the home already has, so it may not be exactly what you have in mind," said California real estate investor Alex Capozzolo of SD House Guys.

Building a new home

Building a new home is an involved process that usually begins with purchasing land and selecting a builder. Once the plans are finalized, construction starts with laying the foundation, framing and completing structural work before moving to interior details like flooring and fixtures. This process can take several months to a year or more, depending on the complexity of the design and any delays along the way.

From a financial standpoint, building a home often requires a construction loan, which has different terms and potentially higher interest rates compared to traditional mortgages. Once construction is complete, the loan typically converts into a standard mortgage.

In addition to construction financing, buyers must also budget for costs like land purchase, permits, design fees and utilities. These expenses can add up quickly and may exceed the initial budget if unexpected changes occur during the build.

There are also hidden costs that many first-time builders may not anticipate. For instance, you may need to pay for utility hookups, landscaping, fencing and other exterior elements not included in the base construction contract.

Weather delays, changes to building materials or unanticipated site issues like poor soil quality can also lead to additional expenses. Setting aside a contingency fund can help manage these surprises and keep the project on track.

Building a new home: pros

There are many advantages to building a new home.

• Total customization: When you build your own home, it's yours to create however you like. "You have the freedom to choose all of the features and amenities you want, so it can be designed exactly how you envision it,” Capozzolo, from SD House Guys, said.
• Greater location choice: Building a home lets you decide exactly where you want to live. That could mean selecting a neighborhood in a school system you want or having the option to build on rural property or acreage.
• Everything is new: Building a new home means you’re easily a decade or more away from having to replace major components, such as the HVAC system or roof. Every part of the home will be brand-new, so you can start the homeownership experience with a clean slate.
• Energy efficiency: New homes are typically much more energy-efficient than existing ones because they're built with modern materials and technology. "This can help to save money on energy bills in the long run," Capozzolo said.

Building a new home: cons

Building a home comes with some disadvantages, which may or may not apply depending on your situation. Consider these potential cons before you build a home.

• More expensive: Building costs have risen at an unprecedented rate over the last few years. In addition to construction costs, you must pay for things you wouldn’t with an existing home, like the lot purchase, landscaping, concrete work and more.
• More effort on your part: Building a home means making hundreds of decisions from start to finish. You must pick out everything from flooring and lighting fixtures to cabinet pulls.
• More expensive to finance: Building a home may require a construction loan with higher interest rates than a conventional mortgage from a traditional mortgage lender. Construction financing can also be more difficult to qualify for, since there’s no existing home to use as collateral for the loan.
• Longer timeline: Building a new home is a much longer process than buying an existing one, Capozzolo, of SD House Guys, said. Construction and furnishing can take months or even years, depending on the home plans and project scope.

Is it cheaper to build or buy a house?

Based on recent statistics, buying an existing home is cheaper than building one. In fact, NAR pegs the median sales price of existing homes at $422,600 as of August 2025, whereas U.S. Census Bureau data shows the median sales price of new houses sold that month was $413,500.

That said, how much you'll save depends on many factors. For example, building a new home in an area where land costs a lot will inevitably come with a higher price tag. Building in a lower-cost rural area may be considerably less expensive. The quality of the materials you use in a new build can also dramatically impact how much you'll pay.

To fairly compare the cost of an existing home versus building your own, you also need to consider the cost of any renovations required to make an existing home livable and the higher maintenance costs of existing homes.

Purchasing an existing home that’s newer, in excellent condition and already how you want is ultimately the most cost-effective option. Based on availability, you can also look into buying a new-construction home that’s never been lived in before, which can be the best of both worlds.

Bottom line

The decision to buy or build is one only you can make, and there are many factors to consider.

For example, needing to move quickly may limit your options to existing homes. On the other hand, if you have plenty of time to find a new place to live, you could choose to build your dream home.

Financial considerations also come into play. Speaking with a mortgage professional can help you determine how much you can afford and whether you meet the criteria for a construction loan. With some research and planning and a serious look at your financial situation, you should be able to get into a new or used home you love.