Everything You Need to Know About New-Construction Homes

Purchasing a home is an exciting time for most buyers. It can also be confusing and stressful if you’re unsure what to expect, especially if you’re buying a house no one has ever lived in.

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Whether you’re a first-time buyer or looking for something newer than what you have, there are several things to consider with new-construction homes.

What Does It Mean When a House Is New Construction?

A new construction is any structure that’s brand-new and never lived in. As a result, these buildings are move-in ready and require very little work for any buyer. New-build homes cover everything from single-family houses to townhomes. They're built to the latest building codes and energy-efficiency standards. Whether you choose a spec home or work with a builder on a custom build, you're getting a brand-new blank canvas ready to make your own.

Why Are New-Construction Homes Cheaper?

Since 2018, the average cost of a new home is around $3.50 less per square foot than existing homes. While this may not sound like a lot, if you’re purchasing a 4,000-square-foot home, you’d be saving $14,000 over the cost of an existing structure. If you’ve hired a builder to build a custom home, you may find it cheaper than purchasing a house that’s already constructed. This is because you can shop around for materials and for contractors who fit your budget when handling electrical work and things like landscaping.

There are other reasons why new-construction homes might be cheaper to own.

• Lower maintenance costs

  . When you buy a new home, everything is brand-new, from your roofing and floors to your septic tank and plumbing. You’ll have fewer monthly or annual repairs to worry about, and most included appliances will come with warranties. This will lower your out-of-pocket expenses over the first several years.

• There are fewer hidden issues

  . Older homes can have hidden problems, such as foundation issues, hidden mold and outdated wiring that cost money to fix before moving in.

• Greater energy efficiency

  . New homes are often equipped with the most energy-efficient features. You’ll pay less for utility bills in comparison to older homes.

• Builder incentives

  . In a new development, many builders offer incentives, such as paid closing costs, which saves money.

Do New-Construction Homes Appreciate Faster?

Home appreciation values depend on several factors, such as inflation, area development, current market value and location. If a new home lies in an area that’s experiencing growth, property values are likely to increase faster than in a lower-income area where opportunities aren’t as prominent.

If you have an older home, you can increase the value of the property quickly with home upgrades. Home improvements that tend to add the greatest value include kitchen and bathroom renovations, energy-efficiency upgrades and landscaping.

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How Do You Buy a New-Construction Home?

Purchasing new-construction homes is a slightly different process than buying an existing structure.

• Search for a builder or locate a development

  . Get recommendations from friends, search online reviews and tour model homes in your area. Look for a reputable builder and get information about their building process.

• Secure financing

  . Shop around for the best mortgage terms. If you have a relationship with your bank, you might want to start there. Some builders also partner with lenders and can offer incentives if you choose their preferred financing. If you’re in the beginning stages of the search and unsure how much you can afford, you can also ask your lender for

  prequalification

  . They'll provide lending limits.

• Customize your home

  . If you’re building a custom home, work with your builder to make adjustments to finishes, upgrades and floor plans.

• Sign a purchase agreement

  . After you’ve spoken with the builder and know what custom features you’re looking for, sign a contract. The contract will offer details on the price, completion timeline and future payment schedule.

• Monitor the progress

  . Visit the site often to see how the build is going. Most builders will also provide regular updates on progress.

• Schedule an inspection and closing date

  . When your home is complete, you’ll want to schedule an inspection. Once everything meets your expectations, it’s time to sign the final papers and get the keys.

Where Can You Find New-Construction Homes?

Find new homes by searching online listings and visiting new housing developments. You may also want to attend home shows and events in your area or schedule an appointment with a real estate agent, who typically has inside knowledge of upcoming developments.

How Long Do New-Construction Homes Take to Build?

According to the U.S. Census Bureau, the average time it took to build a home in 2021 was 7.6 months. Things like home complexity, inspector availability, permitting, availability of workers, weather conditions and supply shortages can all have an impact on the length of time to build new-construction homes.