Each of these two options has its benefits and drawbacks. Building a home, for example, can be time-consuming and expensive. When you buy a home, you’re limited to the available inventory. The best choice for you will come down to your own preferences for cost, time frame, and a few other factors.
What’s the Difference Between Building a House and Buying One?
Per the U.S. Census, the median sales price of new single-family homes in 2020 was $336,900, while the average sales price was $391,900. The median size of a new single-family home sold in 2020 was 2,333 square feet. The following is a breakdown of many of the major categories of expenses involved in building a new home, based on 2019 data from the National Association of Home Builders (NAHB): In contrast, the median sales price for all types of existing homes (condos, co-ops, single-family, and townhomes) was $341,600 during the same month, according to data from the National Association of Realtors (NAR). This represents a 19.1% increase compared to April 2020. That’s less than the cost of building, especially when you consider the cost of land. The median price for an existing single-family home in 2020 was $300,200, according to the NAR’s Housing Affordability Index. An existing home also comes with the benefit of having a searchable purchase history and comparable sales, something you miss out on when building a new home.
Time Involved
Building a new home takes time. The average length of time to complete construction on a single-family home is almost seven months, according to data from the Census Bureau’s Survey of Construction. This doesn’t include the month (on average) that it takes to authorize new construction. One of the immediate benefits of buying an existing home is there is much less of a lag time between when you’re preapproved for a mortgage and when you purchase your home. The average time to close is 51 days, according to the April 2020 Origination Insight Report from mortgage processor ICE.
Other Factors to Consider
If you care about having creative control over many of the exterior and interior features of your home, including the floor plan, countertops, cabinets, backsplash, flooring, and more, it might make more sense for you to build your home from scratch. It’s possible to modify an existing home, but that can often translate into an involved home improvement project, which might prolong your move-in timeline. It also means more money. Remodeling costs can run from $10 to $60 per square foot, depending on the project and where you live, according to HomeAdvisor.
The Bottom Line
A lot goes into purchasing a home, and each person’s priorities, budgets, and timelines are different. Your budget, aesthetic preferences, patience level, and willingness to take on your own remodeling projects will determine which direction you take in choosing whether to build or buy.
