New Home 101: Why Buy a Newly Built Home

Interested in buying a newly built home? You should be! There are many advantages in buying new, and we can tell you why!

Whether you’re a first-time buyer thirsting for knowledge or a resale homeowner eager to learn more about newly built homes, it’s best to start with an understanding of the differences between a new construction home (for our purposes, a new home) and a previously-owned or resale home. 

It’s also important to consider the total cost of ownership. When it comes to a used home, that means the cost to repair and renovate it and also the typically higher cost to heat and cool it. 

“Buyers really need to be educated about the savings that come with a new home, the warranties and the customer service that builders provide, all of which can add value compared to an older home. Advancements have been made in windows, insulation, air conditioning systems, water heaters — almost everything in homes is better than it used to be even a few years ago,” says Diane Morrison, national vice president of sales and marketing for Ryland Homes in Tampa, Florida.

According to research from New Home Source and Metrostudy, a national research firm, the median price for a new home in 2012 was $244,000, 38 percent higher than the median price of a used home. But the median square feet of an existing home is 19 percent smaller than the median square feet of a new home and has 16 percent fewer bathrooms. The median age of a resale home is thirty-seven years and homes that have been around that long typically cost 21 percent more to operate than a new home. The cost savings from owning an energy-efficient new home with all new systems, appliances, and construction materials that won’t require repairs or renovation for years can easily offset any additional purchase price of the home.

Another benefit of buying a new home is that if you decide to move, you’ll be selling a home that meets more recent construction and energy-efficient standards and that offers more modern design elements (such as an open floor plan, higher ceilings, and extensive storage), rather than seeking to sell a home that was dated even before you bought it. 

“We wanted a new home because, even though we owned a lovely Southern Colonial-style home, we found ourselves spending a lot of time and money on maintenance every year,” says Judy Thompson, who purchased a home in an active adult community built by Jim Chapman Communities in Johns Creek, Georgia. “It’s great to have everything under warranty, too. Buying a new home is great because you can personalize your property. Even if you think you’ll make changes in an existing home, you often end up not doing it because you don’t want the mess or to spend the money.”

Four Key Reasons to Buy a New Home

A November 2012 study by New Home Source and Metrostudy shows that more than half of all buyers are shopping new homes  35 percent of homebuyers consider both new and previously owned homes for their purchase, while 19 percent have a strong preference for a new home. Buyers surveyed cited four compelling reasons to buy a new home: quality construction, low cost of ownership, functionality and energy efficiency. Let’s take a look at each:

1) Quality Construction

Quality of construction is the number one attribute for homebuyers when they’re ready to purchase a home. New homes today are built with state-of-the-art products, techniques, and materials that must meet the latest building codes enacted by states and localities. Regardless of your budget, your new home will typically include important safety features such as smoke detectors, ground-fault circuit breakers that reduce the risk of electrical shock, lead-free paint and even an exit from your basement. 

Want more peace of mind? Inspections are conducted at no added cost to new homebuyers at multiple points during the construction process, so you can be confident that the latest building codes for electrical work, plumbing, and energy-efficient features, including insulation, are being carefully met in your home.

2) Lost Cost of Ownership

New homes require less maintenance than older homes and are more energy efficient so your utility bills are lower. 

In fact, according to the U.S. Department of Energy, a new home today is 30 percent more energy efficient that a home built just five to seven years ago. How would you invest these significant cost savings? A family vacation? The kids’ college fund? Retirement savings? Your favorite charity? Or perhaps a mix of the above? The point is that new homes give you those savings and choices. 

New homes also offer peace of mind since all products (and the home itself) are typically covered by a warranty. Most builders offer warranties on their homes, often one or two years on systems and materials and ten years for the structure. In sharp contrast, when you buy an older home, you need to factor in the remaining lifecycle of your appliances, water heater, heating and air conditioning system and other costly and vital components. 

“A new home will be built with the best products available in today’s market including the best and latest technology,” Ryland Homes’ Diane Morrison says. “People often don’t understand what it takes to maintain a home, so when they’re comparing a new home with a used home they may not realize how much more cash it can take to maintain an older home and to replace systems as they wear out.” 

While home costs in your community will vary, you can also use a national new vs. used home calculator to compare the costs of buying a new home vs. an existing home.

3) Designed for the Way We Live Today

Homes designed decades ago met the needs of buyers at that time, such as the desire for a formal living room and a separate formal dining room, at a time when homeowners would accept a single, shared bathroom on the upper level for three bedrooms. 

Times and tastes change, of course. And today, homebuyers prefer an open floor plan, often without a formal living room. Even the smallest new home typically has a private owner’s bath along with a full bath shared by other bedrooms. And some new homes even offer a private bath for each bedroom. 

As new homes have grown larger, they’ve also become more energy efficient and more comfortable for all. And buying new means you don’t need to settle for the style or tastes of others. Buying a new home means that you can choose the floor plan that meets your needs  and you can often customize the layout or features to further personalize the space. New and practical ways to use areas of your home such as the entrance from the garage have gained importance. Today’s busy families often want a so-called drop zone space to store backpacks and sports equipment or a charging station for their smart phones, tablets, and laptops. You can design the storage space in your new home so that your possessions are easily accessible, yet out of sight. 

“We downsized by about 700 square feet but our new house seems like it has twice as much space because it has an open floor plan and every inch of space is utilized,” says Jenny Pauline Mendoza, a buyer with McCaffrey Homes in Clovis, California. “Plus this place has tons of storage. Our 1950s house didn’t have much storage at all.”

Some homebuyers who love to entertain create a catering kitchen or a party prep area outside of the main kitchen with special shelves for platters and punchbowls, extra glasses, and even a beverage cooler or additional refrigerator to accommodate large gatherings. Other buyers have their new home hardwired or designed to accommodate the latest wireless technology for home automation, networking, and security. You can adapt a new home to your needs now and allow for flexibility for the future. 

“When people are downsizing, it helps to build a home with lots of windows, high ceilings, and even vaulted ceilings in some cases so they don’t feel like they’re living in a box,” says Jim Chapman, an active adult community developer in Atlanta, Georgia. “We’re willing to do semicustom work, too  things like adding hooks in the master closet or a tiny niche for a desk with a cable outlet in the master bedroom. It doesn’t cost a lot and we end up with very satisfied customers.”

Homes today are designed for flexibility so they can adapt easily to your needs now and in the future. In many regions of the country, first-floor owner’s suites are extremely popular and found in nearly every new home. In other regions, buyers are opting for a first-floor bedroom suite with a private full bath and a walk-in closet along with an upper level owner’s suite. The first-floor space can be used as a guest room, for older parents in a multi-generation household, or as a future owner’s suite if the homeowners want to age-in-place. 

Best of all, if you prefer that traditional floor plan with a formal living room and a formal dining room, you can opt for that, too, but with the benefit of all new materials, a kitchen that’s never been cooked in, and sparkling new baths with your choice of finishes.

4) Energy Efficiency

Many new homes include Energy Star-rated appliances that can reduce use of electricity or gas and lower your utility bills. But Energy Star appliances are only the tip of the iceberg when it comes to energy-efficient features in new homes. Houses today are constructed from the beginning with features such as energy-efficient windows and more insulation. New furnaces, air conditioning systems, and heat pumps are far more efficient than heating and air conditioning systems from the past.

Homebuyers can use the HERS (The Home Energy Rating System) Index to learn more about the energy efficiency of their new home. According to the website for RESNET (Residential Energy Services Network), a HERS performance score is generated by an assessment by a certified Home Energy Rater. A lower HERS number indicates a more energy efficient home. RESNET says that the U.S. Department of Energy has determined that a typical resale home scores 130 on the HERS Index, while a standard new home receives a rating of 100. A home with a HERS Index Score of 70 is 30% more energy efficient than a standard new home and a home with a HERS Index Score of 130 is 30% less energy efficient than a standard new home. 

While many features in new homes that increase energy efficiency are invisible to buyers, custom features such as solar panels, tankless water heaters, and geothermal heating systems can often be added to further reduce energy consumption. 

“The utility bills on our old house, which was built in the 1950s, were about $300 or $400 per month,” Mendoza says. “Now our bills are about $60 per month, which is an amazing savings. Not only is the house built with much better energy efficiency, in general, but we opted for solar panels, too.” 

For more expert advice on buying and building a new home, check out the free eBook download of New Home 101: Your Guide to Buying and Building a New Home at

Michele Lerner is an award-winning freelance writer, editor and author who has been writing about real estate, personal finance and business topics for more than two decades. You can find her on Google+.

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