UncategorizedShould I Buy a New Construction Home?

Should I Buy a New Construction Home?

The idea of starting fresh in a new construction home can have a strong appeal for homebuyers. While older homes may offer an established presence and existing upgrades or custom features, new construction homes give buyers the latest in building technology and modern floor plans. Depending on your personal style, home-buying budget, and preferred location, you may want to consider purchasing a new construction home. The buying process for a new construction home can differ from that of a pre-existing property.

What is a New Construction Home?

Typically, a new construction purchase involves buying a brand-new home from a developer. This means you’ll become the first homeowner to own that property. The property will include unused features, new appliances, and fresh floors. Buyers can purchase new construction homes across the country from New York City to San Diego.

When touring a new construction home, you may tour a similar model or just review a floor plan. The home you’re looking to buy may not yet exist, so you’ll have to use your imagination to picture how your home will look. Developers may also offer move-in ready, pre-built homes.

No matter which type of new home you purchase, you’ll want to thoroughly research the company’s reputation before signing a contract. Look at other homes they’ve built and search for reviews or testimonials online.

Buyers looking for new construction homes for sale generally have three options:

Custom Homes

If you want to design everything about your home from the ground up, you may choose to buy a single lot and work with a custom builder. These builders often focus on higher-end homes and will invite the homebuyer to participate in the design process, choosing everything from the layout of the home down to the knobs on the cabinets. Buyers looking to design a custom home typically purchase land separately, then find laborers and architects to assist with home design. To find available lots for residential homes, use RealtyHop’s filter to locate available land in your area.

Semi-Custom Homes

Semi-custom builders may offer new house construction in larger developments. Interested buyers will view a pre-built sample home and select their individual lot where laborers will construct their home. Buyers work with semi-custom designers to choose some elements of the home, such as flooring, kitchen cabinets, and countertops. Compared to custom homes, semi-custom builders generally limit the buyer’s selections to more popular features and colors. The semi-custom home resides in a development or neighborhood with homes that have similar layouts, but the interiors differ slightly based on the buyer’s preferences.

Prebuilt or Quick Delivery Homes

If your home buying timeline cannot accommodate a lengthy construction process, you may want to search for quick delivery of new homes or a pre-built unit. Developers may construct a full array of homes and then put those units on the market at one time or may simply have vacancies in a new development that needs filling. Some homes may still include areas that the buyer can customize or may be move-in ready.

Financing a New Construction Home

When you purchase a home prior to completion, the financing process may differ from buying an existing property. For new homes nearing completion, you may only need to give the builder an initial deposit and apply for a traditional mortgage. If you intend to finance the home during the building phase, you may need to seek out different options, such as a construction loan.

Construction Loans

When you purchase a plot of land with the intention to build, you can use a construction loan to finance the cost of the land and the future property. Some mortgage lenders may not offer construction loans, so borrowers may need to spend time researching and shopping around for a compatible provider. Some lenders view construction loans as higher risk because there is not tangible property to use as collateral.

Interest rates for construction loans generally run higher than mortgage loans, but the terms are shorter; only until the end of the construction period. These shorter loans give borrowers time to build and complete a house. At closing, one type of construction loan, known as a construction-to-permanent loan, will convert to a traditional mortgage with a new interest rate.

Mortgage Financing

Buyers can utilize traditional mortgage financing for semi-custom or pre-built new homes, but the process may differ slightly. If you buy a semi-custom home in a development, the builder may offer incentivized financing through their own mortgage company or a specific lender.

The developers may also require that the buyer put down an initial deposit that is more expensive than a traditional earnest money deposit on a pre-existing home. Buyers will not have negotiation room when it comes to this payment, and must submit the full requested amount by a deadline.

Once the construction workers finish building the property, the developer will inform the buyer that their home is ready for move-in. At this time, the buyer must have a mortgage to move forward with a closing.

Benefits of New Construction Homes

Many buyers view new construction as a highly desirable home purchase option. With a new home, you won’t need to settle for features or fixtures that you may not have chosen for yourself. In custom and semi-custom homes, you can choose the design of the more permanent elements, such as kitchen cabinets and countertops, rather than buying a home that doesn’t fit your personal taste. Pre-built homes also tend to offer the latest design trends, making them a preferable alternative to an older home with more dated features.

Latest Building Techniques

Newer property developers have the advantage of learning from the past. Improved construction and building materials can make today’s homes safer and more efficient. Local building codes also require increased safety of new homes compared to older homes.

Combined Energy Efficiency and Technology

New homes offer the best in energy efficiency and smart technology to make life more comfortable and easier to manage. Thermostats, garage doors, lighting, and security systems integrate with apps to give you control of your home from remote locations. Today’s homes also incorporate advanced cable and internet capabilities as the demand for these services has become necessary for daily living.

Additionally, new homes typically offer better insulation and more energy-efficient construction. Through an increased focus on natural light, additional windows can allow for radiant warmth and avoid the need for the same amount of artificial lighting as in older homes. LED light fixtures also increase energy efficiency.

Concerns over water efficiency in states such as Texas have also influenced home construction and design. Integrated rainwater harvesting systems and carefully planned exterior landscaping can help conserve water for homeowners in the country’s Southwest region.


Buyers of custom and semi-custom homes have more choices in home design and decor. If you’re willing to pay for upgrades, you can work with the builder to add the features you want most and eliminate features that you have no interest in adding.

Lower Maintenance and Repair Costs

In a home filled with brand-new fixtures, you should expect only minimal repair costs in the first few years as a homeowner. New homes typically have a builder’s warranty covering workmanship defects for the first year. During the warranty period, if something breaks or leaks, you can contact your developer for assistance. Even with the warranty, you’ll still want to keep up with any recommended maintenance, such as cleaning gutters and HVAC inspections, to ensure your new home stays in great shape for a long time.

New Neighborhood

New neighborhoods have a reputation as a friendly and welcoming environments because everyone moves in around the same time. If you’re looking for a social network in a new location, you might want to consider buying a home in a new neighborhood. Newer neighborhoods may also consider elements like walkability, safety, and recreation, creating an appealing atmosphere for new residents.

Potential Drawbacks for New Construction Homes

New construction homes can also have some drawbacks. Although the negatives may not deter you from buying a new home, an awareness of the potential challenges can help you adequately prepare for your upcoming move.


New home pricing typically runs higher than existing homes. According to the National Association of Home Builders, the median sales price of new construction clocked in at $442,100 at the end of 2022, compared to $366,900 for existing homes. Unlike sellers of existing homes who might expect an offer to come in lower than the asking price, developers will not leave much room to negotiate the purchase price.

When budgeting for a new home, you should also understand that the advertised price generally does not include many upgrades that you might find in resale properties. As the owner of a new home, you may need to budget for desired add-ons such as a deck, finished basement or pool. However, if you’re looking at existing homes with an eye on undertaking major renovations, buying a new home and starting from scratch may seem appealing.


If you commit to buying a home still under construction, or even pre-construction, you’ll need to maintain some flexibility in your move date. Delays due to supply chain issues during the recent pandemic forced many home buyers to wait much longer than anticipated for new homes. As construction delays continue and interest rates rise, some buyers may choose to simply walk away from their purchase and lose their initial deposit. If you have a firm move date, buying a home under construction may not work for you.

Time and Costs Associated With Customizing M

In addition to paying for a new home, you’ll need to spend time and money after settlement to establish yourself in the home. Some costs of homeownership may increase when buying new construction. If you’re only given basic landscaping, such as a lawn and a couple of trees, you’ll need to decide when and how to add flower beds and additional plantings. Also, you might need to purchase additional items which sellers may leave behind in an existing home, such as window coverings or furnishings.


In highly developed real estate markets, all the prime locations may already have homes built on them. With recent increases in interest rates making new home construction more expensive, developers likely will not increase their activity throughout the rest of 2023. Therefore, buyers may need to compromise on location.

If you prefer to buy a newer home more than you care about a specific location, you may need to search farther out from areas where you currently work, visit, or shop. If you’d like to move into a certain area with little new construction availability for larger developments, you may need to look for property builders that specialize in custom home designs and aim to purchase a single plot of land.


The modern floor plans and the latest technology of new home construction combine to give you an unparalleled amount of energy efficiency, beauty, and comfort. As the first occupants of a newly built property, you’ll have more flexibility to customize your living space and turn it into your dream home. While you may pay more for a new home and devote a significant amount of time transforming the empty space into a place you love, in the end, you may decide that you prefer this process over buying and renovating an existing property.