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Want to save up to $500k on a new house? Build instead of buy, study says

Think building a new home is too pricey? Think again

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Entering the housing market is always a huge step whether you’re looking to buy or build a new house. Generally, building a custom home is much more expensive than buying an existing house, but as with most things related to the housing market, in some states, the opposite is now the case. Depending on where you live or where you’re looking to move, this study from storagecafe.com could be great news. Keep reading to find out where to save money by building your own home.

Tiny house with keys to represent buying a home
LKveera / Shutterstock

Current house prices

The current housing market has limited inventory, so prices are at never-before-seen highs. Construction materials have also seen significant price increases over the past few years, making the thought of building a home a long shot for most.

For these reasons, many families have taken buying a house off the table for now in hopes that things will improve in the future. However, in some locations across the U.S., purchasing land and contracting someone to build you a house on it is cheaper than buying a ready-made home.

Construction workers discussing plans
Image used with permission by copyright holder

The best states to build in

The key findings from the study conclude that Western states like California and Colorado and South Atlantic states, such as Virginia and Delaware, are the best places to build rather than buy your next home. If you want to leave the continental U.S. entirely, Hawaii will provide you with around 50% savings if you build a new home.

Other worthy mentions are Maryland, Florida, Utah, Montana, and Idaho, all of which land in the top 10 for savings when building a home. While many of these states generally have high home prices, the total building costs are lower than the median single-family home list price.

Professional painter painting a home's second story

Places to avoid building

All the Midwest and most of the Southern and Northeastern regions are places to avoid if you want to build your next home. In states like Michigan and Indiana, you need around $100,000 more to build a house than buy one. Ohio is the Midwestern state that leads the pack of practically priced pre-made housing.

In states like Nebraska and South Dakota, the land cost is too high for building a home to be a cost-effective choice. West Virginia is the most alluring state for buying in the Southern region, with Arkansas and Louisiana tailing not far behind.

Related

Deciding to move is a big deal, especially if you buy a house. If you’ve paid attention to the housing market lately, you know it can be volatile. But don’t worry — some buyers see huge savings by buying land and building a new home rather than purchasing an existing one. You may find this hard to believe, but in some areas of the country, it’s actually cheaper to design and build your dream home than to buy someone else’s. And the national average is $6,000 in the red for building vs. buying.

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