Is It Cheaper To Build Or Buy A House?

The idea of building a home might seem like a dream come true because you can fully customize the space. But buying a home already built also has its benefits, like being move-in ready right away. You may find yourself wavering between the two as you consider costs, so is it cheaper to build or buy a house?

Cost of building a home

Although you may want to build your dream home, you need to consider the cost of building.

In some cases, buying a house can make a lot more sense.

There are many things to consider when building, such as building materials, labor shortages, and the plot of land you buy.

On the other hand, purchasing a home means you need to consider the layout of the house and potential repairs.

How do you choose? While there are many factors to think about either way, including the real estate market, we’ll discuss which option is cheaper, as well as the advantages and disadvantages of each. And remember, loving your home is totally possible, whether you build or buy!

Is it cheaper to build or buy a house?

In some areas, it might be more affordable to build a home, but in most, you’ll find it is cheaper to buy an existing home.

According to an article from Bankrate with data from the National Association of Realtors, the median cost for an existing home in the United States, not one you are building, is $375,700 in 2023.

However, U.S. News reported on data from Real Estate Witch that the median cost of building a house in 2023 is $446,000, which doesn’t include the cost of purchasing the land.

Based on this, it is cheaper to buy an existing home than to build one.

However, you may find that these numbers vary quite a bit in your own situation. There are several states where building a home is much cheaper than the median listed above, according to GoBankingRates.

Price to build a home

As discussed earlier, the median cost to build a new house is currently nearly $450,000.

However, remember that the cost to build a house will vary based on your location and the materials you choose. But this number is a good ballpark to consider.

Expenses to consider when building a home

Before you consider navigating the home-building process, take some time to estimate all of the expenses. Is it cheaper to build or buy a house? Considering your location and the cost of materials can help.

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. A budget calendar can be useful in helping you prepare for each cost at the right time.


The basics of the home don’t come cheaply. Some structural expenses include framing, building the walls and roof, and the foundation.

Of course, you don’t want to skimp on these items because they create the basic integrity of your home.

With building vs buying a home, you’ll have the ability to customize the layout of the structure, as well.

Interior finishes

Choosing your interior finishes can be a fun part of building a house. The flooring, drywall, etc., are part of the interior finishes.

Building your own home allows you 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 significant expense – perhaps even the most expensive room in the house. You can easily spend thousands on a kitchen installation.

Installing a kitchen will cost at least $5,000 and up to $125,000, according to HomeAdvisor, so you can see that expenses range quite a bit.


Bathrooms are another area of the house that can push the total cost of building a home higher than you anticipated.

On average, adding a bathroom costs $5,000-$35,000, according to Depending on how many bathrooms you have in your home, this can be a significant cost.


An engineer might be involved with your house building to ensure your new home is structurally sound. But you’ll have to pay for their services. Remember that an inspection of your new home with a structural engineer can cost 1 to 5% of your construction expenses, explains Today’s Homeowner.


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

You might consider how to buy land cheap, but there will still be a cost.


Permitting is a cumbersome part of building a home. But unfortunately, it cannot be avoided. Building permits cost varying amounts, ranging up to a couple of thousand dollars or higher, so be prepared.

Renting until the home is ready

As you build a home, you cannot live in it.

In fact, 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.

Ensure your budget can handle this double payment without sacrificing financial wellness before moving forward with a home build.

DIY or hiring professionals

Although it’s essential to consider your expertise before attempting any work on a home, you may choose to DIY some aspects and hire professionals for others.

If you happen to be a professional builder, electrician, plumber, etc., you may save some money by doing some of the work for the house on your own.

However, if you don’t have the know-how, you will need to hire someone, which is an additional cost.

Consider what projects in your home you can do and what you need to hire someone for with the cost of building a home.

Price to buy a home

The median cost to buy a home, as previously discussed, is about $375,000.

However, this price can differ greatly depending on where you live. So it’s important to look at the prices of homes in the area you want to live in.

You will also need to consider additional factors besides buying the home.

For example, are you planning on doing any remodeling or additional landscaping? That’s an added expense.

Do you want to add on to the house? Consider it in your house-buying budget.

Expert tip: Compare the actual costs of buying vs. building a home

Although it is cheaper on many occasions to buy an existing home, you should never take averages as a fact for your own situation.

Instead, price the cost of building vs buying in your own location. Make a list of every expense, from a construction loan for building to home inspections and realtor fees. Then compare the two prices to see which option is better for you.

Advantages of building a home

Building a home customized for your family can be a great idea. First, let’s explore the advantages of building a home.

Fewer people are looking to buy land

When buying a lot, you may not have as much competition. Although, it depends on where you are buying, what state, what is nearby, etc. Many factors affect the value of land.

You make decisions about landscaping

With a new build, you’ll have the opportunity to choose what landscaping you do for the outside of the house, including trees, grass, gravel, etc. This can be a big benefit, especially if you want something specific, like a yard that saves water.

Lower maintenance costs

Due to the newness of the home, you likely won’t have as much maintenance to handle in the near future.

After all, you’ll have all new appliances, a new roof, etc., which can be cost-effective upfront. You’ll still need to repair things in your home over time, but you are likely to have several years before anything significant breaks or needs to be changed. You’ll have time to set up sinking funds for home repairs and add money.

Choose unique features for the home

You can pick out everything to suit your needs and wants. From the number of bedrooms to the kitchen countertops and the flooring, a custom home can be exactly how you want it.

You may also choose to use more or less expensive materials, which can affect the overall price of the building.

Disadvantages of building a home

Of course, there are drawbacks, too. Building a home can be exciting, but there are things to be aware of. A few include:


Typically, the building costs for a home are more expensive. Plus, hidden costs can put stress on the budget of the homeowner before they even move in.

Although you may not be able to know in advance about every single expense, it’s vital to know all the high costs of buying a home and know what to expect before deciding.

In addition, you may want to have extra money set aside for things that you didn’t plan for to avoid being in over your head with debt.


There are also many additional things to consider, such as getting a building permit, a construction loan, and other paperwork that can be daunting and stressful. It’s a lot to keep track of, and it can be a challenge.

Difficulties with management

Building a home has many moving parts and pieces. With that, you’ll likely run into some stressful situations along the way.

With a new construction home, you may deal with problems like an unreliable contractor, appliances or other materials not arriving on time, etc. Issues like this can cost time and money.

Advantages of buying a home

Buying a home has its ups and downs too. And answering, “Is it cheaper to build or buy a house?” isn’t the only thing to consider.

Although you won’t have as many decisions to make regarding the actual home construction, there are still other things to think about.

Let’s start with the advantages:

Faster move in

Once you close on a home, you can likely move in right away instead of waiting for builders to finish up. Everything is already built and set up in the house, so you won’t need to factor in extra months of waiting if something gets off track with the building process.

Although you must consult with the sellers about when you can move in, it may be faster than when you are building.


If you’re considering the pros and cons of building vs buying a home, existing homes are generally more affordable. Of course, you will still have the upfront costs of a real estate agent and a down payment, but there are other expenses buyers can avoid, like labor costs for building.

Because of this, buying an existing home can be one of the best money moves.

Ability to make changes

Although you aren’t building from scratch, you can choose to update areas of the home that matter to you.

For example, you could splurge on a new kitchen without going through the entire home-building process.

So you’ll be able to move in and have somewhere to live, but you can still make the house suit your needs.

Established landscaping

You won’t have to spend anything if your existing home has a green yard. It can be nice to buy a place where the landscaping is already done, and you don’t need to pay landscapers to add grass and trees to the space or spend time doing it yourself.

Of course, all of this depends on the particular home that you buy. And you may choose to make changes to the yard after purchase.

Disadvantages of buying a home

Although it may sometimes be considered an easier process, buying an existing home isn’t without its setbacks. Here are the downsides to buying a home:

Less energy efficient

Older homes tend to have some energy inefficiencies, which can present problems. With a newer home, energy efficiency can be considered before building occurs and factored into the upfront costs.

More maintenance

You might have to fix more things when you move in.

But if you buy a newer home that is only a few years old and doesn’t have a lot of maintenance issues, you can possibly save on costs for a time, which can help.

It’s important to consider any home maintenance or new things you may need to buy before closing on a home.

Replacing and removing old features of the home

You may also need to consider features that need to be replaced, such as wallpaper or carpeting, or you may need to get rid of lead paint, etc. Anything extra you don’t add to the costs initially can present budget challenges later.

Cheapest and most expensive states to build a home

The cost of building a home is not the same in every state. In some places, the costs are much lower than in others.

According to Today’s Homeowner, some of the most expensive states to build include Hawaii and Massachusetts, both costing over $400,000, but the least costly include Mississippi and Arkansas, both costing less than $300,000.

So, as you can see, the location that you build in can be a huge part of determining whether building a home is affordable or not.

Is it cheaper to buy land and then build your house on it?

While it can be less costly to buy land and build your house on it in some cases, the opposite will often be true. It all depends on location and timing when it comes to whether it is cheaper to buy land and then build a house on it.

There are many variables to consider. For instance, was the land bought years ago when prices were different? That can change the cost to build a house. How much will it cost you to build the house at today’s prices? Is building cheaper than buying an existing home or more expensive? These are ll factors to consider that will affect price the price of building a home.

That said, the cost of land plus the build will likely be more costly than purchasing an existing home.

Is it a good investment to build a home?

It can be a good investment to build a home, depending on your reasons and if it makes financial senses and/or saves you money. For instance, you might have a unique living situation where building a home to your specification would work best for you.

If you plan to live in the home long term, it can be a good investment knowing you’ll be there long enough to pay down your mortgage and build up the equity in your home. You may also be able to sell it in several years for much more money.

However, buying an existing home can also be a good investment, depending on your situation. You could consider doing renovation work to customize the home to fit your specific needs.

That said, if you don’t have the funds to build without creating a lot of debt stress, then no, it isn’t a good investment at the time.

If you enjoyed finding out is it cheaper to build or buy a house, you’ll love these other articles!

Is it cheaper to build or buy a house: consider all your options first

Ultimately, you’ll have to decide what matters to you most with building vs buying a home. Although it can be cheaper to buy an existing house, many factors can affect price, in addition to thinking about your preferences.

Do you crave customization? Or are you looking for an affordable and simple housing solution? 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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