A new construction home offers many benefits, including a modern layout, custom design options and a clean slate for starting your next chapter. However, it’s essential to be aware of the potential hiccups that can happen along the way, such as construction delays and the additional costs that could be associated with purchasing a newly built home.
In this article, we’ll weigh 11 pros and cons to help you decide if a newly built home is the right choice for you.
What Is a New Construction Home?
A new construction home is brand new and has never been lived in before, but there are different types of new homes that you’re likely to find as a buyer. These include:
- Custom homes: The buyer is involved in all stages of the design process, creating a one-of-a-kind design.
- Semi-custom homes: The buyer chooses from pre-designed floor plans and can customize them by adding rooms and other upgrades.
- Production homes: The buyer chooses from pre-designed floor plans and can upgrade appliances and finishes. This is sometimes called a “tract home.”
- Spec homes: A move-in ready production home with limited or no customization options.
It’s important to note that new construction properties are available in a wide range of styles and at various price points. As you search new construction listings, you’ll find single-family homes, townhouses and condos.
6 Benefits of Buying a New Construction Home
1. A New Build Is a Fresh Start
As the home’s first owner, you have a complete history of inspections and maintenance reports, so you can make sure your home stays in tip-top shape. You also don’t have to worry about years of built-up dirt from previous residents.
2. Appreciation Potential
Buying a home early in a subdivision’s development can lead to quick appreciation. Prices are often lower early on because the community isn’t built up yet.
“Because they’re brand new, they’re more apt to appreciate versus a resale home,” says Dennis Morrow, a broker with Great Northwest Real Estate in Port Orchard, Washington.
3. Plenty of Customization Options
With a new build, you can design a home that works for you and your family. Upgrades can range from structural additions to visual details. Some of the most common upgrades include additional rooms, gourmet kitchen appliances, granite or quartz countertops, and hardwood floors.
Plus, all the home’s personalization is done before you move in, so you can spend the first weeks settling in instead of renovating.
4. Modern Features and Energy Efficiency
New construction homes are designed with modern layouts to make life easier. They often include the latest smart home technology and energy-efficient appliances, which help lower utility bills. “Everything is up to date,” says Morrow. “With a resale home, if you have to replace a roof or update the electrical, that comes with a higher risk.”
Eco-friendly building materials, such as recycled steel or reclaimed wood, can add to these homes’ lower environmental footprint.
5. Lower Homeownership Costs
In 2024, the National Association of Home Builders (NAHB) reported that the median sales price for a new construction home and an existing home is around $400,000. While the price tag is similar, lower maintenance and utility costs can help new construction homeowners save money. Since everything is new, it’s also less likely that homeowners will need to make immediate repairs.
Most new homes are covered by a builder warranty that can last from one to ten years. This warranty typically covers the windows, structural defects, HVAC, and electric systems. Since all the appliances in the home are new, they should also be covered by the manufacturer.
Property taxes can also be lower at first. Morrow says, “In Washington, you get a break on taxes for the first year because the assessment is usually on the land value and not the home.”
6. Financial Incentives
Some builders offer incentives to attract buyers. These might include free upgrades on home appliances or building materials, mortgage rate buydowns or a credit toward your closing costs. Sometimes there are special loan options or a lender credit if the builder works with a specific mortgage company.
5 Potential Drawbacks of Buying New Construction
1. Unexpected Costs
Upgrades can quickly add tens of thousands of dollars to the home’s final cost, but you can review the price of customizing your house early in the buying process. “You know the prices of upgrades up front,” says Morrow. “There shouldn’t be surprise fees.”
Other costs might surprise homebuyers. For example, many new construction homes don’t come with a washer, dryer or window treatments. Plus, those moving into a community with a homeowners association might have to pay a capital contribution or initiation fee, which may be required to join a new HOA.
2. Construction Delays
While delays are not common, prospective buyers should plan for them with new construction. There are situations where your homebuilding timeline could be affected by supply shortages, bad weather or the time it takes to secure permits.
3. Lack of an Established Community
New construction homes are often located in the suburbs, and sometimes these communities are built before businesses and infrastructure can catch up, leading to longer drives to amenities. New homes built in established neighborhoods will be near amenities but might also be more expensive.
It can take time for a new subdivision to develop character, too. The houses might look too similar at first, especially as trees and landscaping need time to mature.
4. Smaller Lot Sizes
Yards have become smaller in recent years. Data from the NAHB shows that in 2023, about two-thirds of new homes are built on lots under 9,000 square feet. In 1999, less than half were built on lots of that size. The NAHB also reports that the average home size has increased by about 200 square feet in the same period.
5. Potential Issues with Builder Quality
While all new homes are built to code, variances in workmanship and quality materials are common. This could potentially lead to headaches during the construction process and down the road, but your builder’s warranty should help offset these concerns.
Is New Construction a Good Investment?
While the national housing inventory is generally low, some areas have an oversupply of new construction homes, which can lead to low demand and lower prices. Buying in an established area with fewer new construction homes could mean that home prices are more stable, and your resale value could be more substantial down the road.
7 Tips to Help You Buy a New Build
- Research the builder online. If possible, talk to people who have bought or lived in one of the builder’s finished homes.
- Research the neighborhood to see if it will fit with your lifestyle.
- Be realistic about your budget and leave room for upgrades.
- Have a backup plan for housing if your move-in date is delayed.
- Take time to understand your new home’s purchase contract and warranties.
- Hire your own home inspector to get an independent assessment of the home.
- Consider finding a real estate agent who understands the process of buying a new construction home and knows the area.
Is New Construction Right for You?
With custom options and modern amenities, new construction can get you closer to your dream home, but it’s important to plan for potential delays and extra costs. Work with a skilled real estate agent to assess the local market and make a choice that works for you and your budget.
Annie Franklin is a content writer at Homes.com, where she writes about cities and neighborhoods in the western United States. After earning an MFA in creative writing from Virginia Commonwealth University, she spent nearly a decade as a creative writing teacher and literary journal editor. A Virginia native, she currently lives in Richmond, Virginia’s Bellevue neighborhood.
