Building a New Home vs. Buying Retail - Comparing Costs

If you are looking for a new home, you may be deciding between the convenience of a resale home and the customization options of new construction. While in polls most people prefer to build a home, the process and the cost can seem daunting. However, building a new home (vs. buying retail) can be a smart move both aesthetically and financially.


Designing a Home from the Ground Up

Of course, the advantage of designing a home from the ground up is that you can customize it to meet your needs and your personal style. For many people, this is a major incentive, while for others it can feel like an obstacle. If you are considering designing a home from the ground up, it is important for you to understand the impact this will have on your budget and your timeline.


Cost of building a house vs. buying an existing home

Costs associated with building a house vs. buying a house vary widely according to many factors, including neighborhood and home features. When compared on the basis of a house-to-house equation, building a home is sometimes slightly more expensive than buying an existing home.


However, comparing price per square foot returns figures that indicate that it is actually less expensive to build a home. That’s because new construction homes are generally somewhat larger than older homes.


In addition, because you are gaining brand new systems, appliances, and construction materials, your maintenance costs over the first decade or so of home ownership should be considerably less. It’s a common saying that when buying resale you are “buying someone else’s problems,” and that seems to hold true statistically.


How long does it take to build a house?

According to government statistics, the average time to build a new home is somewhere around seven months, with approximately one month for negotiation and purchase and six months of actual building. This can vary widely depending on a number of factors.


Land Acquisition

Obtaining land for a new home can be simple or complex, depending on the location and availability of the land. If you are building on a large parcel, you may have to negotiate sales from multiple parties with divergent interests. Similarly, specialty property like waterfront or mountain lots may have restrictions that prevent certain uses.


Working with a builder in an existing neighborhood greatly simplifies this process. In addition, because the infrastructure for utilities and community amenities are already in place, you’ll save time and money throughout the process.



If you are working with an architect, the design process can take many months and involve site visits and a tremendous number of meetings and consultations. Because every aspect of the design will be custom, there will be myriad details to work out. Working with a builder from an existing home design can circumvent much of this process, streamlining the planning while still leaving many options to your taste and discretion.



One of the most time-consuming and expensive aspects of home building is digging the foundation. Depending on the quality of the soil and the accessibility of the site, it can be difficult to predict how long this part of the process will take and how much you will spend. By contrast, in a builder community this part of the equation has already been factored in and you will have a good idea up front of how this part of the process will affect price and timeline.


Custom Finishes

Custom finishes can add months to your home’s building process due to shortages, custom fabrication, and other factors. Certain types of materials may be in short supply while processes like hand-finishing can also extend the timeline. A larger homebuilder will have a steady supply of options in a variety of styles and materials in order to ensure that an upgraded finish doesn’t derail the process.



The weather can have a significant impact on the building process, causing unforeseen delays and interruptions for weeks at a time. In areas with a great deal of snow or precipitation on an ongoing basis, these delays can be better predicted. However, a particularly bad storm or unforeseen cold snap can still derail the building process and delay the home’s closing process.


Closing Fees for Building vs. Buying a Home

Many of the costs you’ll pay when building a new home are similar to those you’ll pay when buying a resale home. That’s because most buyer closing costs are associated with obtaining a mortgage for the home, and those costs are generally the same in either case.


One way to cut some of the closing costs associated with the purchase of a newly constructed home is to work with the builder’s in-house lender. You may be able to negotiate some discounted fees that can translate into significant savings.


Optional upgrades can make a big difference in your final cost when you are building your own home. It is a good idea to track these carefully in order to avoid sticker shock at the closing table. Remember, you will probably want to upgrade many elements of a resale home as well with new paint, fixtures or finishes. Therefore, dollar for dollar, upgrades may be a wash in terms of cost.


Interested in new home construction? Your local Pulte community makes it easy, with an expert design team and in-house financing to help you every step of the way. 



Contributed to Your Home blog by Christy Murdock Edgar

Looking for more tips, ideas or inspiration? Return Home here.

Published 11.3.19

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