When considering the purchase of a newly built home, potential buyers may be surprised by the high costs associated with such properties. The median sale price for new construction in the U.S. was reported to be $400,500 in February, according to data from the U.S. Census Bureau and the Department of Housing and Urban Development. However, the final value of a newly built house is influenced by various factors beyond just the base price. One of the key factors, as highlighted by financial planner Veronica Fuentes, is the selection of finishes and customization options. These can include everything from windows, flooring, siding, and doors to the placement of outlets and type of light switches. The more customized finishes a buyer opts for, the higher the final price tag.
To limit expenses when buying a new construction home, experts suggest hiring a contractor separately to add desired finishes after the initial home purchase. This approach allows buyers to focus on the structural elements of the house during the initial build and save on costs by deferring cosmetic upgrades for future renovations. By adopting a conservative approach and opting for basic or lower-priced finishes initially, homeowners can spread out their renovation costs over time and avoid overspending on unnecessary upgrades right away.
Cost Breakdown and Financing Options
According to research from Angi, homeowners spent an average of $13,667 across 11.1 projects in 2023, with nearly half using cash from savings to cover renovation expenses. Credit cards were used by about 20% of homeowners, while a smaller percentage turned to refinancing or home equity lines of credit. These findings indicate that many homeowners are willing to invest in home improvements but are using various financial resources to cover the costs. By spreading out renovation projects and prioritizing structural upgrades over cosmetic finishes, homeowners can make more informed decisions about how to allocate their renovation budget effectively.
When it comes to specific renovation projects, such as kitchen and bathroom remodels, costs can vary significantly based on materials, labor, and location. According to Angi, kitchen remodels in 2024 ranged from $14,611 to $41,440, while bathroom remodels fell within the range of $6,629 to $17,536. Given the potential expenses associated with these projects, it is advisable for homeowners to plan their renovations strategically and focus on essential structural improvements before investing in cosmetic upgrades. By prioritizing cost-effective options and deferring non-essential features, homeowners can make the most of their renovation budget and ensure long-term satisfaction with their home improvements.
The cost of newly built homes can be a significant financial investment for buyers. By carefully considering the factors that influence construction costs, adopting a conservative approach to finishes, and strategically planning renovation projects, homeowners can maximize the value of their investment and create a personalized living space that meets their needs and preferences.