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Cost Of Building A Home: Is It Cheaper Than Buying?

Cost of building a home

The idea of building a home might seem like a dream come true. After all, you’ll get to choose exactly what your house includes from the bottom up. But it’s important to factor the cost of building a home into the picture.

Although you may want to build your dream home, the cost of building a home should be considered. Here’s what you need to know.

How much does it cost to build a home?

According to the National Association of Home Builders, it costs $289,415 to build a home on average. Keep in mind that the costs will vary based on your location and the materials you choose. But this number is a good ballpark to consider.

What expenses need to be factored in

Before you consider navigating the home building process, take some time to estimate all of the expenses for your particular area and home design.

Here are the expenses you’ll need to keep in mind. Although some seem obvious, others fall into the category of hidden costs that you might not anticipate.


The basics of the home don’t come cheaply. A few of the structural expenses include the walls and roof. Of course, you don’t want to skimp on these items because they create the basic integrity of your home.

When you build, you’ll have the ability to customize the layout of your structural foundation.

Interior finishes

Although customizing the layout is provides major appeal to build your own home, choosing all of your interior finished might be an attractive feature.

Building your own home gives you the opportunity to pick out everything to meet your specific tastes. Instead of compromising with what’s available, you’ll get to make the choices. But there will be extra costs that go along with this.


The mechanical aspects of a home are usually hidden if they are done right. You don’t want to have to think about your plumbing or electrical systems. But you’ll need to pay for proper installation throughout your home.


The kitchen is often a major expense - perhaps even the most expensive room in the house. You can easily spend thousands on a kitchen renovation or installation.

Depending on the size of the kitchen and the finishes you choose, it could range from $13,000 to $37,000. With the national average at $25,460, you’ll find that these costs can add up quickly.


Bathrooms are another area of the house that can push the total cost of building a home higher than you anticipated. On average, a new bathroom costs between $9,000 to $11,000. But it could spike up to $23,000 according to Angie’s List. Depending on how many bathrooms you have in your home, this can be a major cost.


An engineer will need to be involved to ensure your new home is structurally sound. But you’ll have to pay for their services.


Of course, you can’t build a home without buying a piece of land. Depending on your location, this could be a major expense.


Laying a strong foundation is key to the structural integrity of your home. But the costs can range between $4 to $25 per square foot. With that, it could easily cost thousands to install a new foundation.


Permitting is a cumbersome part of building a home. But unfortunately, it cannot be avoided. Although the costs will range dramatically based on your state and local government, you should expect to pay a few hundred dollars to finalize the permits for your home.

Renting until the home is ready

As you build a home, you cannot live in it. Without the basic amenities installed, you likely won’t be able to move in for several months. With that, you’ll likely need to rent a place to live while the home is completed.

Paying rent while paying for a home to be built can be taxing for any budget. But if you live in a high cost of living area, you’ll find this an especially burdensome expense. Make sure that your budget can handle this double payment before moving forward with a home build.

Is it cheaper to build or buy a home?

According to Zillow, the average home price is $269,039 as of March 2021. With that, it may be more affordable to purchase an existing home than building it from scratch.

Of course, you’ll need to run the numbers for your situation. In some areas, it might be more affordable to build a home. But in most, you’ll find it more affordable to buy an existing home.

Building vs. buying a home

Here’s a closer look at the pros and cons of buying vs. building a home.

Advantages and disadvantages of building a home

First, let’s explore the advantages of building a home.

  • Customized decisions. You can pick out everything to suit your needs and wants.
  • Less competition. When buying a lot, you may not have as much competition.
  • Lower maintenance costs. Due to the newness of the home, you likely won’t have as much maintenance to handling in the near future.

Of course, there are drawbacks too. A few include:

  • The cost. Typically, building a home is more expensive. Plus, hidden costs can put stress on your budget.
  • New neighborhood sounds. Once you move in, will there be other houses getting built nearby? You might have construction noise issues on your hands.
  • Stressful management. Building a home has many moving parts and pieces. With that, you’ll likely run into some stressful situations along the way.

Advantages and disadvantages of buying a home

Buying a home has its ups and downs too.

Let’s start with the advantages:

  • Quick move-in. Once you close on a home, you can move in right away instead of waiting for builders to finish up.
  • Affordability. Existing homes are generally more affordable.
  • Ability to make changes. Although you aren’t building from scratch, you can choose to update areas of the home that really matter to you. For example, you could splurge on a new kitchen without going through the entire home-building process.
  • Established landscaping. You won’t have to spend anything if your existing home comes with a green yard.

Here are the downsides to buying a home:

  • Less energy efficient. Older homes tend to have some energy inefficiencies.
  • More maintenance. You might have to fix more things when you move in.
  • Not customized. You may not find everything you want in an existing home. But you will likely find everything you need.

As you explore your options, you’ll likely find more pros and cons for your unique situation.

The bottom line

In the end, you’ll have to decide for yourself what matters to you most. Do you crave customization? Or are you looking for an affordable housing solution that satisfies your needs? Either way, you’ll need to get your financial house in order to move forward. Not sure where to start? Check out our free foundational courses to build a bright financial future.

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