Is it Cheaper to Build or Buy a House - What Else to Consider?

When the time comes to move house many people like to weigh up all the options before making a decision and whether to buy or build a house is something you might be considering. One of the questions you will ask yourself is building a house cheaper than buying?

However, the initial financials are not the only thing you should take into consideration as there are many other factors you should think about including timings, desired location, and house maintenance. If you're considering building a new home in Chicago, get a free consultation from Fortress Home to help with your decision: [email protected] or +773-770-8607.

The financial cost of building a house vs. buying

Looking at the basic numbers, the cost of building a house vs buying a house is very hard to compare precisely as there are so many factors that come into play. These can include the location, timing, type of house, and many more.

However, looking purely at the upfront costs of buying versus building it appears that in 2021 it's cheaper to build than to buy.

  • The average cost of buying a house in August 2021 is $408,800 according to Statasia
  • The average cost of building a house, according to HomeAdvisor is currently $284,463

When you break down the figures further the median cost per square foot of buying a house is approximately $184, according to data from Realtor.com, while the median cost of building a new house is around $150 according to HomeAdvisor.

It's important to note that the construction figures may not yet include the increase in the cost of certain building materials, due to the pandemic, which can add up to 10% to the cost of building a new home.

We should also remember that these figures are not comparing like for like, as the house buying figures look at the entire market, while the building figures will cover a smaller sample. This also doesn't take into account the size and location of the properties, which will vary greatly from city to city and state to state.

More than just the headline costs

As mentioned above it's very important to take into consideration more than just the headline cost of building a home vs buying as there are many other factors that you should think about when deciding your next step on the housing ladder. These factors, many of which have financial implications, include:

  • Location
  • Convenience and speed
  • Maintenance
  • Financing
  • Energy efficiency
  • Resale
  • Design and personalization
  • Gardens and outdoor space

Ongoing and future maintenance

When buying an existing house you will be inheriting older, used systems, appliances, and features, most of which have a limited life span. So it's important to consider the maintenance and upkeep costs when purchasing a pre-existing house, which may require many costly repairs.

For example, according to the International Association of Certified Home Inspectors (InterNACHI) deck planking will only last about 15 years and a central air system will need to be replaced after 7 - 15 years. Replacing an old deck can be costly with materials ranging from $6 - $35 per square foot, depending on the type of lumber or composite material you choose. And remember, this doesn't include the labor costs which will be required to re-build your new decking. If you need to replace the central air in your newly purchased older home you should factor in around $5,500 - $7,500.

New homes have the advantage of coming with all new appliances and systems, most of which come with warranties, so any repairs in the first few years should be free of charge. If you are building a custom new house you can also choose to use stronger, more durable materials, which will cost more initially but save you money in the long run.

Winner: Building a house

Energy efficiency

When considering the upkeep of your new house, energy efficiency is an important thing to consider. How well is your home insulated? Does it have double glazing? Are the appliances all EnergyStar rated?

The answer to all of these questions will play a major role in the ongoing costs of running your own house, through your utility bills.

Did you know that current building standards are much tougher with regards to energy efficiency, and building materials used today are designed to ensure that houses are well-insulated and sealed? The US Energy Information Administration says that houses built after 2000 are 21% more energy-efficient than those built before 2000, with this trend continuing into the 2010s and 2020s, due to tightening of regulations and improved heating and cooling technology.

All of which means the newer the house the lower the energy bills.

Winner: Building a house

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If you know exactly what you want when it comes to your new home, building a custom home has many advantages over looking at existing homes. You can choose the exact floor plan and layout you want to ensure your new construction meets all of your needs. If your dream home has a second-floor terrace, with a hot tub overlooking the garden, then you can factor that into the plans and budget, but finding an existing house with those features will be exceedingly difficult.

Even if you buy a more standard new house from a developer there is usually room to discuss decor and paint color, but with existing homes, you have to factor in the costs of redecorating to suit your taste, on top of the purchase price.

Winner: Building a home 

Location & neighborhood

Depending on the housing market where you live there might be a lot of competition for homes in the best neighborhoods, especially if you're searching in an urban area. But it's very unlikely that there will be empty plots of land in these long-established city neighborhoods, making it very difficult to build a new house exactly where you want to be.

If you're considering a new construction house in a more rural area you're likely to have a lot more choice over plots and prices for land will almost certainly be lower than in the city, making building a house a more appealing option.

Winner: Tie 


During the home buying process, many people consider outdoor space to be an important factor, and with gardens and landscaping often older is better. If you find an older house with a well-established garden it can be a major selling point. Shrubs and trees can take years to grow and settle in, so when building your own home you might have a long wait for your garden to look exactly how you want it to.

Winner: Buying a house 

Speed and convenience

Purchasing an existing home from a real estate agent comes with some advantages regarding speed and convenience. As long as your offer is accepted you can move into your new home within a few months, depending on the previous owners and your financing. This means that if you're starting a new job in a new city and need to relocate, buying an existing home will be a lot more convenient.

Building your own house is a more time-intensive process and can take up to a year, or even longer, depending on the complexity of the project, your contractors' availability, and getting your financing in place.

If you choose a custom home you'll also have to find and purchase land, and make a lot of decisions throughout the home building process, which while exciting can also be time-consuming. If you choose a new construction home from an established developer this can speed things up, as they will have some standard floor plans with some limited choices and already have the plots of land ready to build on.

Winner: Buying a house 


Unless you have come into a recent windfall you're almost certainly going to need to borrow some money to pay for your house move.

If you speak to a real estate agent or financial advisor they will generally tell you that getting financing for an existing house is much easier than a new property, as the loan systems are set up for traditional mortgages and housing loans.

The situation for financing house building is improving and, as long as you're working with reputable home builders, you should be able to get a construction loan to cover the costs of the building work, but you will be required to provide more paperwork in order to secure the loan, including full plans and schedules as well as a contract with a licensed house builder or general contractor.

Winner: Buying a house 


If you're looking to buy an existing home in a popular neighborhood, and the real estate market is buoyant, there can be a lot of competition for the best houses. This can mean spending a lot of time with your real estate agent and rushing to put in offers on any properties you're interested in. This can be stressful and may result in you losing out on your dream home.

When building your own home there is much less competition, as fewer people generally go down this route, although you may still have to act quickly when you find the right plot of land. Although there are many stresses with building a house, losing out to another buyer with a higher offer is not one of them.

Winner: Building a house  

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Moving on

While you might be planning to stay in your dream home forever there might be a time when you need to sell up and move on. There are pros and cons to both selling a newer house or a more established home.

An older house may be in a more desirable neighborhood, which will appeal to certain buyers. With a new home, if it was built in a new neighborhood or housing development you have to hope that it has thrived over the years you've been living there.

However, a newer house will have the advantage of being more energy-efficient, and if you designed your custom home well, more desirable to buyers.

As long as you choose high-quality materials when building, your newer house will also be a more appealing prospect in terms of maintenance and upkeep.

Winner: Tie


So after looking at all the factors, which has the most pros and cons:

Building a house

Building a house usually wins in these areas:

  • Upfront cost
  • Ongoing and future maintenance costs
  • Energy efficiency
  • Customization
  • Location & neighborhood — tie
  • Competition
  • Moving on — tie

Buying a house

Buying a house usually wins in these areas:

  • Location & neighborhood — tie
  • Landscaping
  • Speed and convenience
  • Financing
  • Moving on — tie

Frequently Asked Questions

Is it cheaper to build or buy a house right now?

In previous years, the answer to the question 'is it cheaper to build a house?' would generally be no, with buying often working out cheaper than building. But with the current housing market in 2021, it can work out cheaper to build your dream house than to buy it.

How much does a house actually cost to build?

The average price to build a house ranges from $100-$200 per square foot, but can go up to $500 per square foot for truly unique, designer, custom homes. So the cost of building a house very much depends on the size and style of the home you're looking for.

Is it better to buy land first and then build?

If you are planning to build your own house and you see an affordable plot of land in a good area, it might be a good idea to buy the land before planning your house. In general, most people buy the land for their new house as part of the planning process, so they can ensure the land they buy is suitable for the house they want.

Before buying any land it's very important to do a proper soil survey to ensure the plot is suitable for building on. You should also check any local zoning laws to make sure you can build a residential property on the land.

Can I build a house for 100k?

The cost of building a house depends a lot on the location and size of the house you are looking for. If you live in an area with cheap land prices and want a small 2 bedroom home, you should be able to build your house for $100k. However, in some areas, the cost of land alone could eat up a lot of that budget.

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