New Construction Homes vs. Resale: Why Buying New Might Be Better

Buying a house is one of the biggest financial decisions most people make, and the market offers two fundamental means: acquiring an existing (resale) property or acquiring new construction homes. Both have their merits. But the magic of a brand-new home keeps gaining popularity among homebuyers who are eager to have the modern amenities and the unique experience of customizing their spaces from scratch.

New construction homes typically present a compelling package, boasting fewer immediate maintenance concerns, reduced initial repair costs, and the potential for greater appreciation in value, especially in developing areas. Although the upfront cost might be higher, the long-term advantages and the prospect of creating a bespoke living environment can make new construction a remarkably worthwhile investment.

Key Takeaways:

• New homes generally have stable prices, avoiding bid wars common with resale homes. Builders may offer incentives like covering closing costs.
• New homes come with customization, warranties, and new systems. They often meet current building codes, offering better safety, energy efficiency, and modern amenities.
• Resale homes still have advantages. These include established neighborhoods, potentially lower property taxes, unique architecture, quicker move-in times, and room for negotiation.
• Be aware of higher upfront costs, longer wait times, unfinished landscaping/communities, and smaller lot sizes for new construction homes.

Let's delve deeper into the specific benefits that often tip the scales in favor of buying new.

Predictable Pricing vs. Market Volatility

In many hot real estate markets, resale homes are subject to the whim of supply and demand—and bid wars are often the result. As measured by Redfin, close to 70% of U.S. homes experienced bid wars during peak seasons in highly competitive metros in recent years. This pushes prices over asking and leaves the buyer stretching budget or settling on amenities. With resale homes, the final price may swing wildly depending on the interest of other buyers, recent nearby transactions, or even emotional bidding.

In comparison, new construction homes may have more definitive and stable prices. Builders, especially ones constructing within master-planned home communities, have pre-established prices for specific floor plans, upgrades, and building sites, with prospective customers knowing exactly what they will pay out of pocket. Although some of the upgraded features on the higher-end may add to the price, the starting cost isn't subject to varying buyer competition. This may reassure those who are tired of the gamble and stress often linked with making an offer on resale homes.

Closing Costs: Always vs. Sometimes Optional

In resale homes, consumers usually assume full responsibility for closing cost charges—typically between 2% and 5% of the purchase price of the property. They may range from title insurance and lender to escrow charges and taxes on the property. While negotiation is an option, there is less expectation on the part of sellers of existing homes to pay for these particularly during a seller’s market with competing offers on the table.

New construction homes, on the other hand, often come with more flexible options. Many home builders offer promotional incentives that include partial or even full coverage of closing costs, especially if buyers use their preferred lender or close within a set timeframe. These perks can translate into upfront savings. Just keep in mind that these incentives can vary widely depending on the builder, region, and current market conditions.

Hidden Repairs vs. Affordable Upgrades

Buying a resale property often comes with inheriting the wear and tear from previous homeowners—some obvious, some not. Even with a full inspection, surprise repair costs can materialize after the purchase, from old pipes to roof leaks or decaying HVAC units. A full-home renovation, as determined by HomeAdvisor, can cost anywhere from $19,000 to over $88,000, depending on location and size. This is a post-purchase cost homeowners are not always fully budgeting for when pricing out a resale.

In new houses, the cost of upgraded features tends to be lower when purchased as part of the building package. Builders may pre-package features like smart homes and energy-efficient amenities at a percentage of the cost of retrofitting later. Upgrades are budgeted for and planned as part of the building budget so homeowners can customize their home without the hassle of remodeling once occupied.

Outdated Codes vs. Current Standards

Resale homes, particularly those developed a decade or more ago, were built to building standards that may be outdated. Components from electrical and insulation standards to structural integrity may need to be upgraded. Older homes may not have newer amenities like ventilation—things that can have long-term effects on comfort, safety, and energy bills. Renovating a home to current standards may, in a worst-case scenario, cause unforeseen expenses and delays.

Meanwhile, new construction homes built today have to conform to current local and state building regulations during permitting and building. These are current safety provisions and environmental or energy efficient homes. Most builders, however, go one step further, installing advanced building materials and more airtight building envelopes.

Higher Upkeep vs. Lower Initial Maintenance

Among the hidden costs of buying an old house is the potential for near-term or short-term repairs. Whether you are repairing a failing roof or fixing old pipes, they are common issues within the early years of ownership. 

New construction homes, meanwhile, offer a blank slate. The HVAC, appliances, roof, or pipes will be new and come with a warranty. Most builders offer a 1-year workmanship warranty and longer protection like a 10-year structural warranty to provide peace of mind and financial cushion if anything goes wrong during the onset. With fewer surprises and minimal maintenance required during the first couple of years, new homes may offer much long-term savings—and much less headaches.

Limited Environmental Resilience vs. Built for a Changing Climate

Many older homes weren’t built with today’s environmental challenges in mind. Without adequate insulation or long-lasting materials, older homes may not cope with hot or cold weather or even with hurricanes. Upgrading a resale property to today’s climate requirements, like flood-proofing, may cost and logistically challenge homeowners.

New construction homes, meanwhile, tend to have climate adaptation and energy effectiveness as a key focus. Contractors can now typically build with advanced insulation, solar panel preparation, and flood-resistance. These features are not only practical but can also boost a home’s future resale value. According to a NAHB survey, more than 80% of consumers value energy-efficient appliance and window features as necessary or desired, and sustainably minded features are a strong selling point for comfort and future resale.

Do Resale Homes Have Advantages? Absolutely.

While new construction homes offer a host of modern perks, resale homes still hold strong appeal for many buyers—especially those looking for character, location, or convenience. 

Here are a few legitimate advantages of going with a resale:

Established neighborhoods: Resale homes are often in established areas with mature trees, sidewalks, and an experienced feel of place that newer subdivisions are not able to replicate.

Potentially lower property taxes: Older homes, in certain regions, may have lower assessed values, which could mean lower yearly property tax payments.

Unique architecture and larger lots: Older houses tend to have distinctive architectural elements or larger plots which are not characteristic of newer developments.

Quicker move-in timelines: Since resale homes are move-in ready, they can offer faster closings. This is ideal for buyers facing relocation deadlines or expiring leases.

Room to negotiate: Resale home sellers could have some wiggle room on their price, particularly if the home is an old listing. 

Established local amenities: Older neighborhoods tend to have schools, stores, parks, and transit stops—providing a level of convenience some newer projects are only constructing towards.

Downsides of Buying New Construction to Consider

Though brand-new homes have many perks, there are some trade-offs to consider. 

Below are some of the possible disadvantages to take into account when looking for a newly constructed property:

Higher upfront costs: Newly constructed homes tend to cost more, particularly when you consider lot enhancements, design packages, and optional components.

Longer wait times: Construction from scratch may take some months—or even more—based on timelines, labor bottlenecks, or delays related to permits.

Landscaping and community still in progress: Newly built areas can have immature trees, incomplete amenities, or an unfinished sense of neighborhood for the initial years.

Limited room to negotiate: Developers are less prone to negotiate on cost, particularly on popular projects, but may grant incentives on other fronts.

Smaller lot sizes: Smaller lot sizes are common with most new constructions because of the zoning and build intensity—meaning there is less outside space compared to older homes.

Construction noise and ongoing development: As an original occupant, you can expect months (or years) of adjacent building activity as the community becomes complete.

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Conclusion: New Might Be Better — But Know What Matters Most to You

New construction homes provide a strong value proposition. This can be up-to-date features, energy efficiency, fewer unexpected repairs, and the possibility of tailoring design to your own taste, all packaged with a typically predictable buying experience. For some consumers, particularly those seeking a long-term, low-maintenance residence, the benefits may justify the higher cost.

Nevertheless, whether to buy a new or resale home is very personal. Everything depends on what is most important to you: location, timing, or lifestyle. The bottom line is to understand the trade-offs and opt for the solution that suits your goals, budget, and ideal home.

FAQs: New Construction vs. Resale Homes

How do you estimate new home construction costs?

Begin with the builder's starting price for the model you have set your sights on and then tack on the price of upgrades, lot premiums, and closing expenses. Don't forget to allow for landscaping, window treatments, and appliances if they are not included. A builder or real estate agent who is well-versed on new developments can give you a better gauge based on local market demand.

How do you find new construction homes?

You can find new construction homes through online platforms like Zillow or Realtor.com. You can filter for “new construction” or check local builder websites and new community developments in your area. Working with a real estate agent who specializes in new builds can also help you uncover pre-construction opportunities not yet widely advertised.

Is it better to buy new construction or an existing home?

That's up to you. You get newer homes with newer materials, better energy efficiency, and lower repair needs, but you may get less character, newer and potentially less established neighborhoods, and longer move-in times. Consider the pros and cons given your time frame, budget, and desired lifestyle.

How much is new home construction?

Prices range broadly depending on location, size of the home, and custom finishes. As of current data, building a standard size residence in the U.S. will cost between $150 and $200 per sq. ft., but high-end areas or luxury areas may cost much more. You should always get a detailed breakdown from your contractor.

When is the down payment due for a new construction home?

Generally, a builder will ask for a deposit when you sign your contract—3% to 10%—with the balance of your down payment due on closing. If you are funding the build yourself (custom build), payments can be staggered during the build.

How long does it take to move into a new construction home?

The timeframe may range, but production builders finish homes within 4 to 7 months, and custom builds can range from 9 to 12 months and longer. Weather, permitting, and supply-chain delays are all possibilities, so you should factor some flexibility into the build. 

Do resale homes appreciate faster than new construction?

Resale homes within existing neighborhoods could experience rapid short-term appreciation, particularly if the location is highly sought after. But brand-new homes within expanding neighborhoods can provide great long-term potential, especially if the area continues to grow and property values appreciate over the long term. Appreciation is location, trend, and condition-dependent, not necessarily age.