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9 Myths About Buying a New-Construction House

by | Feb 14, 2023 | Blog, Buyers, Homeowners, Homes, Villas and Condos, New Construction, News, Real Estate News | 0 comments

Many first-time homebuyers might shy away from the prospect of buying a brand-new home, assuming: It will cost too much. It will take too long.

While purchasing new construction is indeed different from purchasing previously owned property, many misconceptions abound about new builds. As a result, homebuyers who’ve heard these rumors might be passing over a smart path to homeownership that makes sense for many Americans today.

“Given declining housing affordability and limited existing home inventory, a full one-third of inventory on the market is now new-construction homes,” says Robert Dietz, senior vice president and chief economist for the National Association of Home Builders.

In other words, in a housing market plagued by limited inventory, prospective homebuyers can’t afford to count out new-construction homes as an option—and they certainly shouldn’t just because of some persistent misconceptions.

With that in mind, we’re here to set the record straight on some easily busted new-construction myths that just won’t quit.

1. New construction homes are more expensive

While new-construction homes might technically cost more upfront, that price tag is not the whole picture.

“It’s true, on the average, that new homes of similar sizes historically outprice pre-owned by about 16%,” says Stephen Haines, president of Artisan Built Communities. “But since homes don’t possess a clear odometer on them, like one would use to evaluate a used car, buyers need to consider all the costs of purchasing to understand their total cost of ownership.”

A new-construction home, after all, will sport a brand-new roof, appliances, HVAC equipment, and major systems that homebuyers likely won’t need to repair or replace anytime soon. In other words, while a new-construction home might have a sales price that seems more expensive upfront, it’s actually saving a buyer from having to replace, upgrade, or “bring to code” elements of a previously owned home, which could cost tens of thousands of dollars.

“Depending on the age of the pre-owned homes, one should understand the remaining life expectancy of these components,” says Haines. “One must look closer to total cost of ownership to understand the truth.”

2. You’ll be waiting a long time to move in

It’s true that new-construction homes do take time to be built—on average, about 6.5 months from the ground up.

However, this does not mean you’ll need to wait that long, since builders often start building long before they have a buyer. Construction on these “spec homes” might already be well underway or even completed before you strike a deal. So if you don’t want to wait at all, see if there is a spec available.

Yet it’s also worth keeping in mind that the build time will vary widely, particularly with recent supply chain issues that might lengthen the timeline. Factors that could affect construction time frames include the availability of labor and materials as well as municipality permitting times.

Bottom line: Make sure to ask when they expect the house to be done, and what happens if the house is not done on time.

3. It’s harder to finance a new-construction home

Actually, the exact opposite is true here. Thanks to potential builder incentives and lenders liking the fact that a person is buying something new (which translates to less risk), there might be more simplicity in financing a new home.

“Builders often maintain relationships, partnerships, or even wholly owned subsidiaries whose primary focus is to help borrowers find better lending options,” says Haines.

Plus, title companies that work with builders tend to do “batch” title searches on the new parcels in a community all at once. This helps an urgent buyer get to the closing table faster.

“If you are looking at a larger national builder, they will generally have affiliated lending companies or their own lending companies that willoffer you several incentives to do business with them instead of an outside lending source,” says Don Turner, national sales director of new homes at®.

If you happen to find a better deal with an outside lender, maybe someone you’ve been pre-approved through, most builder lenders will usually work to match or beat that deal to keep your business in-house so they can directly manage your mortgage file. And if you are working with a smaller builder that does not have an affiliated lender, the builder will typically work with a local mortgage broker to assist buyers in securing loans.

4. New homes lose their value faster than pre-existing properties

While it’s true that new cars lose a lot of their value the instant they’re driven off the lot, the exact opposite is the case with new homes. In fact, many new-construction homes appreciate in value even before their buyers have moved in.

“Most buyers who buy in the early stages of construction in a community can expect to build equity even before they closeon their home, because of price increases as the builder sells more homes,” says Kimberly Mackey, founder of New Homes Solutions and a sales and marketing management consultant specializing in residential homebuilding. There is generally also another spike in value once the entire community is completed.

5. You can’t inspect a new-construction home before you buy it

You can absolutely do a home inspection before you purchase a new construction.

“I would be cautious of any builder who refuses to allow you to perform a home inspection,” says Bill Samuel, owner of Blue Ladder Development.

In fact, buyers who choose to purchase a new-construction home can actually periodically inspect the home throughout the build, giving them and their inspector a much higher understanding of the home’s condition; plumbing, electrical, and HVAC systems behind the walls; insulation; and more than they obtain by inspecting only a completed home.

“I would also encourage buyers to try and perform an inspection before the builder starts drywalling the house,” says Samuel. “Having the inspector walk through the home before the drywall is installed allows him to see many important parts of the home that will be covered up.”

New-construction homes are also inspected by local municipalities throughout the construction process, and those same groups provide a final certificate of occupancy before move-in is allowed.

Homebuyers also are provided an opportunity to conduct a walk-through of their home before taking possession of it. All in all, there are plenty of opportunities to kick the tires on a new house.

6. New-construction homes are lacking in character

Beauty is in the eye of the beholder. It’s the same thing with what someone defines as character. And just because something is new, it doesn’t mean it can’t have every feature you’ve ever dreamed of in a house.

“A person can choose or add different features for whatever they can afford to buy or add on,” says federal construction and security contractor Charles Chadwick Jr. “I’ve seen homes in subdivisions where some had vinyl siding only, and others had bricks/stones added in addition to vinyl siding.”

Trends tend to be fleeting, and new-construction homes are more likely to be up to date.

“New homes possess the most current designs,” says Haines. “As it relates to existing homes, the older the home, the harder it is to help the exterior of the home look current.”

“Nothing is more limiting than buying a home as is,” says Haines. “You have the most choice when buying new, regardless of the builder’s option offering.”

It all depends on the builder. Some builders build homes on spec—meaning the home is already built to certain specifications, and in that case, the customer will have very few or even no choices. Others build homes to plan but allow for a variety of selections and/or upgrades.

To determine what kind of builder you might be working with, check builder reviews before you get into a contract.

8. New-construction homes are poorer quality than pre-owned homes

“They don’t build them like they used to” is an old saying that just doesn’t hold water when buying a new-construction home. No matter what kind of house it is, the building construction principles generally do not change at all.

“For example, the construction of a load-bearing wall will not ever change—whether it’s in a new home or a custom-built home,” says Chadwick. Regardless of specific features, a house is still going to be built to a requisite standard.

“New homes are subject to the latest in building code, which has become more stringent over time,” says Haines. He notes they are subject to improved electrical wiring requirements, more ground-fault interruption requirements (including outdoor HVAC equipment in 2022), higher insulation requirements, more efficient air conditioners, and improvements in plumbing. (Old copper and early PVC are highly subject to leaks.)

9. You don’t need a real estate agent to purchase new construction

Technically this is true: You are not required to have a real estate agent for many new-construction home deals. However, it is generally still a good idea to have your own representation.

Because a new-construction deal is really no different than any other real estate transaction, there might be opportunity for you to negotiate on the price, contract terms, add-ons, completion date, and other incentives. Having a real estate agent to help with this can help make sure you’re getting the best deal possible.


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