Build vs. Buy a House Calculator: Is It Cheaper to Build?
Whether it's cheaper to build or buy a house depends on more than the builder's price. Building adds land, site work, permits, a contingency, interest during the build, and somewhere to live while you wait. Buying adds closing costs and any repairs. This calculator puts both totals side by side.
Your estimate
Enter your numbers
This calculator needs JavaScript. Results are estimates, not an offer of credit.
What goes into the comparison
When you buy a new home from a builder, the price already includes the land, construction, and the builder's own overhead and profit. The NAHB 2024 Cost of Constructing a Home survey found an average new-home sales price of $665,298. Of that, $91,057 was the finished lot and $428,215 was construction. The other $146,026 covered the builder's overhead, marketing, sales commissions, financing, and profit.
When you build on your own lot with a custom builder, you still pay for land and construction, and your builder still earns a profit. But you also take on costs that a finished home doesn't have, like site work, design, permits, a cushion for overruns, interest on the money drawn during the build, and housing while you wait.
Worked example
Take the NAHB averages: a $91,057 lot plus $428,215 in construction is $519,272 before soft costs, contingency, and interest. Compare that total, plus your other build costs, against what a comparable existing home sells for in your area, plus closing costs and repairs. If you already own your land, enter 0 for land, and building often looks much better.
For local prices, the U.S. Census Bureau's characteristics of new housing data shows what new homes are like and what they sell for by region.
Frequently asked questions
Is it cheaper to build or buy a house?
It depends on your land, local construction costs, and home prices. Building often pencils out better when you already own the land or can't find the home you want. Buying is often cheaper and faster in areas with plenty of existing homes.
What costs do people forget when building a house?
Site work and utility hookups, permits and impact fees, design fees, a contingency for overruns, interest during construction, and rent or housing while the home is built.
Does owning land make building cheaper?
Yes. Land is one of the biggest costs of a new home, and many construction lenders count land equity toward what you put into the project.
How long does building take compared with buying?
Buying an existing home can take weeks. Building usually takes many months after permits, and owner-built homes often take longer than homes built for sale.
Does this calculator include financing?
It includes interest during the build and the construction loan's closing costs if you enter them. It doesn't compare long-term mortgage costs, which depend on the rate and loan your lender offers.
More construction loan calculators
Related guides
- How much can you borrow for a construction loan?
- Using land you own toward a construction loan
- What if your construction loan goes over budget?
Sources
- NAHB, Cost of Constructing a Home, 2024, sales price breakdown
- U.S. Census Bureau, Characteristics of New Housing
This calculator is for general education. Results are estimates based on the numbers you enter, not an offer of credit, a rate quote, or a commitment to lend. Requirements vary by lender, loan program, and location.