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Building a Home V. Buying a Home

The perfect house is hard to find. There’s a lot of things to consider: style, space, neighborhood, schools, and most importantly, cost. It can be difficult to find an existing property that has everything you're looking for, which is why some people choose to build their own home instead. However, figuring out the cost of building a house vs. buying one can be a challenge.


So how much does it cost to build a house? According to data from the National Association of Home Builders, the median price of constructing a single-family home is $289,415, or $103 per square foot.

There are a few main costs involved in the construction of a home. Sure, each time you build a home, costs are a little different, but here are the biggies:

  • The shell of the house, which includes walls, windows, doors, and roofing, can account for a third of the home’s total cost, or $95,474.

  • Interior finishes such as cabinets, flooring, and countertops can eat up another third of the budget, averaging $85,642.

  • Mechanical, like plumbing and heating, runs around 13%, or $37,843.

  • Kitchens and bathrooms are the most expensive rooms to build. So if you're looking to save money, ask yourself whether you really need that third full bathroom, or will two plus a half-bath do?

  • Architect and engineer drawings will run about $4,583.

Now you know the basic cost to build a home, but the expenses don't end there. Here are a few extra costs you'll need to be aware of that aren't factored into the above price:

  • The cost of a plot of land to build on averages $3,020 per acre. That said, the average home is built on only 0.2 acres, so unless you want a lot of space in a highly desired neighborhood, that alone won't break the bank.

  • Excavation and foundation work are by far the most variable cost when building a home, you never know what you’re going to find until you start digging—be it bad soil or massive boulders. However, if excavation and foundation work goes relatively smoothly, the average cost for both is $33,447.

  • You'll need a building permit, of course, which averages $908 nationally.

  • Other costs you'll incur before you hammer even one nail include land inspections ($4,191) and an impact fee, levied by the government to cover the costs a new home will incur on public services like electricity and waste removal ($1,742).

Basically, you can buy an existing single-family house for a median price of $223,000, or $66,415 less than building one.

So knowing that it is usually cheaper to buy a home than to build one, what are the advantages of building a house?

There are several advantages to building a home. Everything from pipes to the heating and cooling systems will be new. That means no costly repairs in the near future—and so a newly built home could end up costing less in the long run. Plus, of course, you get to design your home to your exact specifications. If you have very clear ideas of how you want your home to look, this blank slate could be worth every penny. Additionally, you can make your home energy efficient, so you can save a significant amount every month on your energy bills.

There are also advantages to buying an existing home.

The two primary advantages to buying an existing home are convenience and cost. Once you are pre-approved by your lender, you can shop around, pick out a home, and make an offer. A qualified real estate agent can streamline the process by helping you find appropriate properties, guiding you through negotiations, and assisting with the paperwork. Once your offer is accepted, you may be able to close on the deal, and then move in within a month or two, depending on the circumstances. Plus, if you finance your home you could go in with as little as 3% down plus closing costs, or even 0% down plus closing costs if you qualify for down payment assistance. So the upfront costs will be significantly less. Plus, you will also save yourself the headaches that inevitably come with construction.


Accurately determining the full difference in costs involved in building a new house vs. buying isn’t an exact science, it's more like dance. It depends largely on your location and list of must-haves. When it comes to financial risk, buying an existing home is the safer choice, but if you have the land and a reliable builder, it’s possible to construct a new home just as affordably. Consider all the benefits and risks carefully to get the most for your money and make the best decision for you and your families specific situation.

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