If you’re wondering whether it’s cheaper to buy or build a home, the numbers say that purchasing a house is typically cheaper, but that may vary with location and the kind of house you want to live in.
However, if you crave the process of creating a home from scratch and want total personalization, you might prefer to build. And it might actually wind up being a better financial move than buying an existing house in your area.
Read on to take a close look at this topic so you can decide which option suits you best.
Table of Contents
- Key Points
- • Buying a home is generally cheaper up front, with a median cost of $398,300, including closing and immediate repair costs.
- • Building a home costs around $428,215 on average, excluding land costs, which can run $91,057.
- • New homes require less maintenance and often come with warranties, while older homes may have higher ongoing repair and utility costs.
- • Location, home size, and personal preferences that affect costs and customization significantly influence the decision to buy or build.
- • Building a home can involve more stress, potential delays, and higher initial costs than buying an existing home.
Is It Cheaper to Build a House or Buy a House?
If you let the numbers tell the story, it may be cheaper to buy a house than build one yourself. Then again, it may cost you less to build the house you want, especially if that house won’t be too large or elaborate.
The average cost to build a house from the ground up, according to a recent survey from the National Association of Home Builders (NAHB), is $428,215 — not including the land cost, which could add $91,057 to the price, depending on the location and property size. Meanwhile, the median cost to buy a home is approximately $398,300, as of June 2026. That’s a lot of numbers that can make a straight comparison difficult.
Prices can, of course, vary. If you are building a simple new home (perhaps it’s a one-level layout) in an area with a low cost of living, new construction might be quite affordable vs. buying. Much will depend on the particulars of your situation.
Cost of Buying a House
As mentioned, sales figures suggest that it can often be cheaper to buy an already built house than to build a brand new one. But when it comes to buying an existing home, the price paid to the seller may only reflect a portion of the actual cost of homeownership.
Even if an individual can afford the home listing price, there are often additional expenses, such as closing costs and any renovation or repair fees. Here’s a closer look.
Identifying Existing Wear and Tear
For prebuilt homes, age is one factor. The older a house, the more likely it is to need some upkeep and extra care.
Before buying an existing house, a home inspection conducted by a certified professional can help future homeowners stay informed about the current state of the house. You’ll want to be prepared for any major repairs or structural improvements that are needed.
Typically, the buyer is responsible for paying for a home inspection, which can add several hundred dollars to the purchasing costs. However, that can be an important look at the home’s condition and can let you know about and negotiate upcoming expenses. For instance, if the hot water heater is nearing the end of its lifespan, the house needs rewiring, or the foundation definitely needs work, you could then try to get the seller to address some or all of the associated costs.
Evaluating Home Improvement Costs
When you buy a home, you will likely want to make some changes. Perhaps you want to install a heat pump, swap out the kitchen appliances, add a half bathroom, strip off wallpaper, or simply buy new furniture to make the place yours.
These kinds of changes will add to the listed purchase price. For that reason, it’s often worth evaluating the cost of future alterations when estimating the cost of buying a house, whether such changes are large or small.
Ongoing Repairs, Maintenance, and Warranties
Even if repairs are not required right away, it can be useful to review the age of an existing home, along with that of its parts. When you build a home, everything is likely to be brand new. When you buy a home, you could have systems and appliances that are decades old and in rough shape.
Although buyers may not want to replace the roof at the time of purchase, mulling over the average lifespan of major home features (such as roofing) can be beneficial. Some questions:
• When were the house features last updated?
• How well have these features been maintained? (The term “deferred maintenance” may signal you have some work to do.)
• What will need repairs first in the near future?
Here’s one extra maintenance detail to think over: Older homes may not be as energy efficient as newly built houses, meaning that, without upgrades to existing systems, it could cost a buyer more each month to heat and cool the house. Such ongoing and future expenditures may, over time, offset any savings received early on from buying instead of building a new home.
First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.
Questions? Call (888)-541-0398.
Cost of Constructing a New House
So, compared to buying an existing house, how can a buyer evaluate how much the cost of building a new home might be? According to recent data, the average single-family home costs about $162 per square foot to build, after subtracting the land investment and the cost of a contractor’s overhead and profit. However, that figure is just a mathematical average. The individual cost can still vary greatly, depending on a home’s location, the builders chosen, the property lot size, the materials used, and other variables.
Calculating Construction Costs
The NAHB estimates that construction costs amount to almost 64.4% of the average single-family new home build (finished lot costs comprise about 13.7% of the sales price). Included in the construction costs are things such as:
• Building permit fees
• Land preparation
• Excavation and foundation work
• Frame construction and sheathing
• Roofing pricing
• Plumbing, electricity, and heating, ventilation, and air conditioning (HVAC)
• Windows and doors
• Appliances
• Flooring
• Cleanup
Put another way, if a new house costs $300,000 total, $193,200 of that would go toward construction, including materials and labor.
Recommended: The Cost of Living in California
Interior Finishes
On top of those costs, individuals interested in building a new home may also want to ponder the cost of interior finishes. According to the NAHB, interior finishes (such as walls, stairs, and doors) amount to about 24.1% of new home building costs.
While the actual amount will depend largely on a homebuyer’s specific choices, based on this average, $72,300 of a $300,000 home would go toward interior costs, such as painting, trim, doors, plumbing fixtures, appliances, and lighting.
Pros and Cons of Building a House
While on paper it can sometimes appear cheaper to buy a house than to build a new one, it may also be helpful to look deeper than just the listing price of a finished house for sale. Here are some of the pros to building your own home:
• A brand-new house could require less maintenance and upkeep for years into the future. In many newly built homes, items such as appliances, roofing, and HVAC may be covered initially by manufacturer and construction warranties. In that case, were something to break (if under warranty), the out-of-pocket expense could be covered (and not up to the buyer to pay for).
• A customized home may appeal on another level as well. Having a home that is designed exactly as you like can be incredibly satisfying. It can reflect your personal taste and address every need.
On the con side, consider these points:
• When it comes to how long it will take to build a home, it’s likely a lot longer than buying one. It takes an average of 10.5 months to complete a contractor-built new home, according to the 2025 data from the U.S. Census Bureau. Not all buyers may want to wait around that long to move in.
• As previously mentioned, building a home can be more expensive than buying one that is already built.
• You will need to wrangle permits (or have someone do it for you) when going through the steps of building your own home.
• With a built-from-scratch home, buyers could also run a higher risk of ballooning construction costs or extended delays, which might result in extra interim costs, too. While construction on the new home is being finished up, for instance, a buyer may need to pay for another place to stay.
• Also, there’s stress involved when delays and extra expenses crop up. You need to have time available to interact with your building team, too, which can be an issue for some people.
Pros and Cons of Buying a House
Next, consider the benefits and drawbacks of buying a house. On the plus side:
• As described above, buying a house often costs less than building one.
• If you buy a house vs. build one, you will likely be able to move in more quickly. In fact, you might even be able to move in right away, without any renovations.
• When you buy a house, what you see is what you get. There won’t be any surprises as construction gets underway and, with luck, no areas that don’t wind up looking the way you’d imagined they would.
Now, for the downsides of buying vs. building a house:
• It may not be exactly the house you want, and you may not be able to remodel it to become your dream house.
• You may have to deal with the stress of bidding wars and other nuances of house hunting, especially in a hot housing market.
• The home you buy may have maintenance issues and may not be as energy efficient as a new home.
Recommended: First-Time Homebuyers Guide
The Takeaway
It is typically faster and less expensive to buy an existing home vs. build one. However, whether it is cheaper to build or buy a house can come down to individual situations and variables such as desired locations and home amenities or design features. For different people, the main motivating factor may vary, and the choice of buying or building will reflect a very personal preference.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
FAQ
Is it cheaper to build a home or buy?
It is typically cheaper to buy a home vs. build one. Right now, price surges in construction are challenging American homebuyers and home builders and impeding housing and economic growth, according to National Association of Home Builders data.
How can I save money to build a house?
If you want to save money to build a house, you can track and reduce your spending, grow your money in a high-yield savings account, pay down high-interest debt, and also try to earn more via a side hustle. Keep in mind that building costs can vary based on your location, home size, and the materials you choose.
What is the average timeline to build a house?
Building a new home from the ground up takes an average of 10.5 months, based on U.S. Census Bureau data for contractor-built properties. Because construction takes significantly longer than purchasing an existing house, it is important to prepare for potential delays. This longer timeline can also add extra stress and require temporary living arrangements while you wait for your home to be finished.
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
SOHL-Q326-073