When buying a newly built home, many buyers are often surprised by the total cost. The median sale price for new construction in the U.S. was $400,500 in February, according to the U.S. Census Bureau and the Department of Housing and Urban Development. However, the value of a newly built house depends on various factors, including the finishes added. Certified financial planner Veronica Fuentes, a wealth management advisor, explains that the cost of a new build can increase significantly depending on the finishes chosen by the buyer. This includes aspects such as windows, flooring, siding, window panels, doors, outlets, and light switches. Each selection adds to the final cost, creating potential sticker shock for buyers.
To save money on a new build, experts recommend considering hiring a contractor later on to add desired finishes. Angie Hicks, a home expert and co-founder of Angi, advises buyers to think about elements that can be easily added at a later date. By deferring certain finishes for future renovations or upgrades, buyers can keep the overall price of the newly built house within range. According to the State of Home Spending by Angi, homeowners spent an average of $13,667 on 11.1 projects in 2023. This level of expenditure was slightly higher compared to 2022, showing a trend in increasing renovation costs among homeowners.
When it comes to covering renovation costs, homeowners use various funding sources. The survey conducted by Angi found that almost half of homeowners (46%) used cash from savings to cover renovation expenses. Additionally, about 20% of homeowners used credit cards, while a small percentage refinanced an existing loan or utilized a home equity line of credit. Financial planner Veronica Fuentes advises her clients to be conservative in their approach, as certain finishes such as knobs, flooring, and paint can be easily changed later on through hired contractors.
Experts suggest focusing on the structural elements of a newly built house rather than expensive finishes. While costs vary depending on materials, labor, and location, most homeowners spent between $14,611 and $41,440 on remodeling their kitchens in 2024, according to Angi. Similarly, bathroom remodels can range from $6,629 to $17,536. Angie Hicks recommends opting for basic or lowest priced features when building a new home if you plan to upgrade them later. There is no rush to finish every detail of the house during the initial build, as certain elements can be added or upgraded over time.
Buying a newly built home comes with hidden costs beyond the initial sale price. By carefully considering finishes, deferring certain upgrades, and focusing on structural elements, buyers can save money on their new build. It is essential to plan renovation projects thoughtfully and use various funding sources to cover the costs effectively. With the right approach and financial strategy, buyers can create their dream home without breaking the bank.
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