Delving into the new construction home buying process might be your ticket to significant savings. If that sounds too good to be true, consider this: you could pocket up to 34% in savings compared to buying an existing home. Building a brand-new house typically costs anywhere from $118,749 to $499,810 (not including the cost of land), and has an average price tag of $308,758. On the other hand, if you were shopping for an existing home back in November 2023, you’d be looking at a median sales price of $434,700. Now, that’s a difference worth considering! If you’ve never built a custom home or purchased a new build from a developer, you’ve probably got a lot of questions about the new construction home buying process. Living in a shiny new place with zero maintenance issues sounds like a dream but have you weighed all the pros and cons of buying new? Are you even sure new construction is right for you? The ease of finding a new construction home to purchase also depends on the current market. New housing construction tends to rise during strong real estate markets and fall during times of uncertainty. For example, single-family housing starts (a measure of new residential construction) declined 6% from 2022 to 2023 as high mortgage rates and inflation created affordability issues for buyers. In this guide, we’ll help you weigh the pros and cons of the new construction home buying process and walk you through each step. By the time you finish reading, you’ll have a clear picture of what it means to buy a brand new home, and you’ll be able to decide if this is the right path for you. We’ll weigh the pros and cons at the end, but let’s start with an overview of the steps involved in the new construction home buying process. Buying a new construction home can mean anything from choosing a house that is already completed and ready to buy in a brand-new subdivision, to designing a custom-built house on an empty lot you’ve already purchased. A tract home is a house that is part of a new development. Builders will often purchase a large tract of land on which to create a new neighborhood from scratch. These houses are sometimes referred to as “cookie cutter” homes because they often look quite similar — but the advantages of buying a tract home are that you’ll know exactly what you’re getting, and prices can be especially favorable because builders are working with bulk-buy discounts from material suppliers. “If you’re buying in a new construction neighborhood — or you have one builder or a few builders that are putting up an entirely new subdivision — then they already have pre-selected floor plans and options, and you as a buyer get to benefit from economies of scale,” says Brian Beatty, a top agent in Charleston, South Carolina, where new construction homes are prevalent. “If you’re building in a mature neighborhood, you’re just building new construction for yourself. That’s going to be custom, and it’s going to cost more.” A spec home is one that has been completed by a builder and is ready for move-in. It’s still a brand-new home, and you’ll still be the first to live there — you just won’t have been part of the design process or had input on the materials used. Spec homes are a great option when you want the never-been-used thrill of a new property, but perhaps do not have several months to wait for a house to be built from scratch. A custom home is just that — a totally customized property. You’ll have a say every step of the way, from working with the builder to determine the best blueprint for your lot to choosing specific appliances at the very end. Custom homes are generally the most expensive way to get into new construction, but if you want to build your dream home from the ground up, this is the way to go.
When you walk in a new construction site, that on-site agent that’s working in that model home, they’re friendly and nice — and they do not represent the buyer. They’re representing the builder, and it’s their job to get the builder top dollar and under the best conditions.
Step-by-step guide to the new construction home buying process
Step 1: Decide which type of new construction home is best for you
Tract homes
Spec homes
Custom homes
