See the average sales price of a newly constructed house and see if building a home makes more financial sense for you than buying an existing home.
The cost of building a home can average between $137,901 and $523,890, depending on location, materials, and labor. You may also need to purchase land, which can add $3,000 to $150,000 to the build cost. For those considering building a home, start by planning a budget to maximize your money, and explore your financing options to offset the cost of construction.
We'll walk you through the various factors that may impact your home build cost and share financing tips to help you prepare.
Zillow data show the average price of a new construction home in the U.S. was $439,000 in February 2025. The latest U.S. Census Bureau data from March 2025 put the average price of a new home at $497,700. Meanwhile, the National Association of Home Builders reported a much larger number — $665,298 — based on its 2024 survey of builders.
Zillow found that over half (55%) of home shoppers who plan to buy in the next year said they’d prefer a new construction. Meanwhile, 45% said the same for existing homes. There are many reasons people prefer a newly built home, including lower maintenance costs during the initial years of ownership, knowing you’re the first to live there, and having a home designed specifically for them. If there’s a shortage of homes in your area, or you can’t find a home that suits your needs or preferences, building a home could be a solution, provided that you research the costs carefully. You can work with a builder to design your own home, or buy one that’s already under construction.
Your ultimate price whether you buy existing or new construction can be affected by your market, where you’re looking to live, and some other factors. We’ve got a detailed comparison of each option if you’re still unsure of which to choose.
For a quick overview of what buying a new construction home would entail, watch this video.
A Zillow analysis from July 2024 compared the cost of newly built homes to existing ones and found that new construction costs $3.50 less per square foot. Building a home involves a lot of moving parts, each of which has its own cost associated with it. For example, labor and land costs vary widely across the country. The type of home you build, and the types of finishes you select, also affect the total cost.
Here's a breakdown of all the things that will affect your final new build price:
Location significantly impacts land costs and labor rates. The South often has lower land and labor costs due to fewer regulations, while areas with high demand drive prices up.
Delays in permitting or construction can add up to $60,000 to a build. Planning for potential delays is crucial to staying within budget.
Builder incentives can lower labor costs, especially in buyer’s markets. These include covering closing costs, rate buy-downs, and potential price reductions. Builders have also been more flexible with pricing and waived lot premiums in recent times.
Selecting materials can heavily influence costs. Interior finishes account for about a quarter of construction costs, so choosing more affordable options can reduce the total price.
Interior finishes accounted for about a quarter of construction costs, according to the survey. About 14% of those interior costs were for finishes, so that’s one area where your choices can lower or increase costs.
Financing options vary by home type. Construction loans are common for custom builds and often convert to traditional mortgages upon completion. To learn more about options in your area — and how to pay for it — talk to an agent or loan officer to get your finances in the best shape. A strong financial profile can help you qualify for lower interest rates. You can also use Zillow Home Loan’s BuyAbility tool to determine your home-buying budget based on your personal financial situation and current mortgage interest rates.
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