60% of Buyers Wanted New Construction Last Year. Here Are the Pros and Cons

New construction has its perks -- as well as its pitfalls.

If you're looking to buy a home, you have choices. You can buy a house that already exists or have one built from the ground up.

The idea of new construction may seem appealing to you, and if so, you're in good company. An estimated 60% of people who were looking to buy a home in 2020 said they'd prefer new construction to an existing home, according to a survey by the National Association of Home Builders.

But new construction has its disadvantages, too. Here's what you need to know.

The upside of new construction

There are plenty of benefits to buying new construction.

1. You get a chance to design your own home

When you buy new construction, you get an opportunity to customize your space to truly create your dream home. Want a double oven in your kitchen? A double sink in your master bathroom? All of the features you want could be yours if you opt for new construction.

2. You won't need to spend money on renovations

When you buy a home someone else has lived in, you're likely to find at least a few issues with it, even if they're mostly cosmetic in nature. The great thing about new construction is that you can oversee every last detail, from the knobs on your kitchen cabinets to the color of your bathroom tiles. And that means you won't have to find ways to finance home renovations once you move in.

3. You'll be less likely to encounter major repairs early on

Buying a home that's brand new means you're less likely to run into costly repairs the first few years you live in that home. New construction homes tend to come with a builder's warranty, which covers workmanship issues for your first year in your home. In addition to that, many individual appliances come with their own guarantees. For example, your newly-installed water heater might come with a five-year warranty. Your roof and heating and air conditioning system might have similar warranties. This means you won't have to stress about surprise repairs that eat into your savings account or drive you into debt.

The pitfalls of new construction

On the other hand, there are some downsides to new construction to consider as well.

1. You're likely to spend more

Generally speaking, it'll cost more to buy a new construction home than it will to buy a comparably-sized home in the same neighborhood. Not only will you generally need to come up with a higher down payment, but you'll also be left with a higher mortgage payment every month.

2. Your home may not get finished on time

When you sign a contract for a new construction home, you'll be given an estimated closing date. But construction-related delays could push that date off, leaving you to scramble to put a roof over your head. That's the situation you'd be stuck in if your lease on your current residence ran out and you couldn't renew it, or if you sold your existing home and had to move out before your new home was ready for you to move in.

3. You could end up paying more than the initial purchase price you agree to

When you buy new construction, your purchase price may not include some of the higher-end finishes you want, like granite countertops or soft, luxurious carpeting. The result? You could end up paying a lot to upgrade and bust your budget in the process. Furthermore, it's common practice for new construction contracts to have an escalation clause that allows a builder to pass higher-than-anticipated costs on to a seller. If your contract contains such a clause, you may, for example, be on the hook to pay up to 10% more for your home if your builder's materials come in more expensive than expected.

Though the lure of new construction is pretty clear, before you rush to have a new home built, weigh the pros against the cons. You may decide that you're better off buying a home that already exists, even if it has its share of flaws.