Is it Cheaper to Build or Buy a House?

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Custom building your home is the best way to make sure you end up in your personal dream home and leaves you with a true feeling of personalization in the Real Estate process.

New construction homes come with different costs, though, and the work that can go into designing and building the final home could take more time than buying an existing home. If you are considering a move, there are many things to consider when deciding whether to buy or build a house.

We will discuss the difference between buying and building and what you should expect to spend on home builders, building materials, and the final closing cost if you do choose to create a custom home. The time it will take for construction on anything from a Tiny House, which is a new trend in the housing market, to a full-sized floor plan can impact the cost of new construction, as well. 

How Much Does it Cost to Build a House?

The costs of home building are always changing due to the times and the current real estate market. Building a custom home from scratch is always going to cost you more than a pre-built home or a home that is created from a predetermined speculative design. The average cost to build a new house in the United States is $298,000 in 2021, with prices ranging from $150,000 to $445,000 for most homeowners. This can vary based on a long list of factors, though, which we’ll discuss in depth. 

Size is the most obvious factor that impacts the price of a new build. According to data compiled by Home Advisor, it cost between $100 and $200 per square foot to build a new house in 2020. An 800 square foot tiny home on average costs $80,000-160,000 to build. The average new single-family home sold in America in 2019 was 2,322 square feet, which will cost you between $200,000 and $500,000 to build from scratch. A basement will add an additional $10-100 per square foot, bringing that price to $110-300 per square foot for a home with a basement. Today, the real estate market is being influenced by low inventory, and the median price of an existing family home was about $330,000 in March of 2021, according to data from the National Association of Realtors (NAR). Because of the state of the market, if you keep your budget in check, it might be cheaper for you to build from scratch right now!

Factors such as location, labor, building materials, finishes, and the current state of the real estate market are constantly changing and can impact your price. Labor makes up about 40% of the cost to build a new house, and permits, design fees, and materials make up the other 60%. More specifically, here is how Home Advisor breaks the average home construction budget by category:

  • Land & Site Work: 3-8%
  • Foundation: 10-15%
  • Framing: 10-20%
  • Exterior Work: 15-20%
  • Major Systems: 10-15%
  • Interior Finishes: 25-35%
  • Administrative/Design/Permits: 10-25%

Labor costs can be broken down, too, by the type of laborer. Here is what you can expect to pay for each labor service:

  • Construction Manager costs: $3,150-$50,000. 5%-15% of total project cost.
  • Electrician rates: $50-$100 per hour.
  • Roofer: $5,000-$10,000.
  • Plumber costs: $45-$200 per hour.
  • Framer rates: $4-$10 per square foot.
  • Drywaller prices: $1-$3 per square foot.
  • Architect & Structural Engineer rates: $100-$250 per hour.
  • Soil test cost by a Geotechnical Engineer: $800-$1,800.
  • Landscape Architect fee: $1,000-$4,350.
  • Land Excavator and grading cost: $1,500-$5,250.
  • Land Surveyor fee: $400-$700.

Some of the systems and build can also be broken down, as follows:

  • Rough-in Plumbing costs: $1,500-$20,000.
  • Electrical wiring: $20,000-$30,000.
  • HVAC costs: $1,500-$13,000.
  • Framing costs: $20,000 to $50,000
  • Roofing installation prices: $5,600-$11,500.
  • Windows cost: $3,000-$9,100.
  • Exterior painting costs: $1,800-$4,300.

The cost of finishes and materials will entirely depend on your taste and choices, but the installation of those finishes can be estimated:

  • Cabinet install fees: $2,000 – $30,000
  • Countertop installation costs: $2,000 – $4,000
  • Door installation cost (multiple): $5,000 – $20,000
  • Drywall installation prices: $5,000 – $30,000
  • Flooring install price: $10,000 – $35,000
  • Interior painting prices: $4,000 – $11,000
  • Appliance prices: $3,000 – $15,000
  • Lighting fixture costs: $2,000 – $12,000
  • Fireplace installation fees: $1,000 – $10,000

Of course, the price will always depend upon the floor plan and the intricacy of the home design, and you may need to purchase a plot of land in a development before you can build your custom home. A real estate agent can help you find the best location for your home and find a good deal on the land, but this will vary greatly based on the area in which you build. Choosing a development with a selection of plots and floor plans already determined will likely save you time and money. If you go a more custom route, you will need to plan out your home and have a good roadmap for the construction project to keep your budget and timeline on track. Make sure to make the best decisions you can before construction begins, so that you don’t have to make costly changes later in the process. Drawing out the process with delays and changes will cost you more in labor and unnecessary waste, adding to the closing cost. 

How Long Does it Take to Build a House?

The 2019 United States Census Bureau report states that it takes an average of seven months to build a house from start to finish. This can vary, though, depending on a number of factors. Your project has to be authorized before you can break ground, and the authorization process can take about a month. If an architect has to draw up your design plans, you could be looking at up to four more months for your home to be completed, but if you are choosing a speculative home design, the design period could be shorter. To be safe, plan for a year to complete your new construction. There are ways to trim this time down, though. A custom build will probably take the most time, but you have choices. Some builders offer ready-to-go floor plans that you can choose from, and simply customize finishes to save on design time. Taking that a step further are built-for-sale homes, sometimes called tract or speculative build homes. These are faster, because the builder is building many of the same homes, so while yours won’t be unique, it will be a new construction home, and it will be faster. This path makes choosing your plot of land easiest, too, as the community is already laid out and divided up, waiting to be built on. The same census report shows that built-for-sale homes are completed in an average of six months.

Construction delays can happen, though. The climate in your location plays a significant role in new construction build times. Poor weather conditions will slow down your construction process. If the ground is frozen or muddy, work will be delayed, both for the quality of your home and the safety of workers. So, if you are building in a region that expects a lot of snow or extreme weather that will halt construction on your home during certain seasons, it will take longer. The southern regions of the United States experience the fastest building timeline for this reason, as low as six months, but if you’re building your house in the north, you can expect construction to last around a year due to delays in the winter.

Delays can happen for other reasons that are in your control. Changing your mind about design details of the home, such as finishes or floorplan, will of course cause additional delays. If you make one change that affects your budget, it can create a domino effect of more changes in other areas to compensate financially. Every design change also means a change order. Change orders are adjustments to the original building plan, and this means time spent communicating with vendors, cancelling and placing new orders, and waiting on deliveries. These deliveries can take weeks, so every time you change your mind, you’re extending your construction time significantly! The more time you waste, the more you are paying in labor and other costs. To save time and money, make sure you set a plan and a budget, and stick to it.

Advantages to Building a Custom Home

A plus to building in 2021 is that because the home market is so hot, homes are being sold very quickly with a lot of competition between buyers. You can save yourself from bidding wars, multiple offers, disappointment, and stress if you opt to buy a plot of land and build your own home, but there are extra costs to weigh to determine if it is the most affordable route. The obvious upsides exist, in that you get to design the home to your tastes and specifications and create the dream home you’ve always wanted, down to individual surfaces, hardware, and the floor plan. Additionally, in a newly built home, you can expect less maintenance and no customization after you move in, and you install the newest appliances, roofing, and HVAC systems to make sure your home is up to the latest standards. A new construction home often includes a warranty plan, where expected maintenance and repairs related to settling or possible defects will be covered in the first year. Because all of your appliances and systems are new, they will also be covered by manufacturer’s warranties. This may not be true for an existing home, which could have underlying problems waiting to be discovered and older appliances outside of their warranty period. In an existing home, you would have to make expensive purchases before you can enjoy these benefits.

Advantages to Buying an Existing Home

With the right realtor and a smooth process, buying a pre-existing home can often save buyers a lot of hassle and time while keeping you from breaking the bank. A well-maintained home could be ready for move-in without needing to do much more than signing the papers and pay the agreed-upon fees. This process can also be a much less stressful experience when guided by a good real estate agent, who can facilitate each step of the process. They will choose homes for you based on your tastes, budget, and needs, and help you be sure you’re getting the best bang for your buck by advocating for you in your contract. Closing on a home can take as little as 45 days, which is way less than the amount of time it would take to custom design your home and have it built. Some may say that an older home has the character and design elements that they want and can’t find in a new construction. If you prefer antique design elements and a certain “look” or a homey, lived-in feeling that can’t be easily or affordably achieved in a new build, an existing home is the right choice for you.


The choice to build or buy a house depends on several basic factors: your budget, your timeline, and your design preferences. If you are strict about your building plan and you have time to wait for it to be constructed, building a new home could be the more affordable choice for your home. If you need to move quickly and can find the home you want already on the market within your budget, building might not be the path for you.