Build or Buy in Tennessee? Here’s What Saves You More

The average cost to build a home in Tennessee is around $425,000, while the median home sale price is about $383,300.

So, is the building worth the cost? This guide leads you through a detailed breakdown of the real cost of building in Tennessee. It reveals hidden expenses and potential savings, ultimately helping you decide whether to build or buy - what’s the right choice.

As of 2025, the average cost to build a house in Tennessee ranges from $180 to $350 per square foot, depending on location, design, and material choices.

This means building a home could cost between $360,000 and $700,000, excluding land and site preparation expenses.

Building a home in Tennessee involves understanding all the different costs that come with it. Key considerations include:

• Size of the home: Larger homes naturally cost more to build.
• Materials: High-end finishes will increase expenses.
• Land Costs: The average price per acre in Tennessee is approximately $22,700, though this can vary based on proximity to urban centers.
• Location: Construction costs differ across cities. For instance, a building in Nashville averages $193.24 per square foot, while in Memphis, it's about $108.50 per square foot.
• Labor costs: Plumbers can charge $61.52 to $88.58 per hour, plus materials. Electricians may charge $71.58 to $1,083.19 per hour, plus materials.
• Permits and Inspections: Getting the right permits and conducting inspections can cost from $500 to $2,000.

When calculating the total cost of building a house in Tennessee, it's important to consider both direct construction expenses and additional costs that may not be immediately apparent.

• Foundation: Depending on soil conditions and design, foundation costs can range from $10,000 to $35,000.
• Framing: The structural framework typically costs between $30,000 and $70,000.
• Roofing: Roof installation expenses vary based on materials, averaging between $6,000 and $40,000.
• Utilities Installation: Connecting to local utilities can add $9,000 to $34,500 to your budget.

• Site Preparation: Clearing and grading the land may add $1,500 to $5,600 to your expenses.

• Interior Finishes: Depending on your preferences, interior finishes can range from $75,000 to over $200,000.

By considering these factors, you can create a complete budget that shows the real cost of building your home in Tennessee.

When finalizing your mortgage, ensure your insurance documents include the correct mortgagee clause—it’s crucial for lender protection.

When weighing the options between building and buying a home in Tennessee, several factors come into play. It's essential to weigh the pros and cons of each option. Here’s a detailed breakdown to help you make an informed decision.

• Customization: Building lets you design your home the way you want, including layout and finishes. You can choose energy-efficient materials and modern technology that suit your lifestyle.
• New Construction Benefits: New homes often come with warranties, meaning less immediate maintenance. They also typically have better energy efficiency, which can lead to lower utility bills.
• Quality Control: You decide on the materials and their construction, so you secure a strong investment.

• Higher Costs: The average cost to build a home in Tennessee ranges from $340,000 to $640,000, excluding land costs averaging $22,700 per acre. This can be significantly higher than buying an existing home.
• Time-Consuming: Building a home takes 6 to 12 months or more. This delays your move-in date.
• Hidden Costs: Expenses like site prep, landscaping, and utility connections can add thousands to your budget. For example, site preparation can cost between $1,500 and $5,000.
• Market Risks: If the housing market changes while you build, you might encounter unexpected financial problems.

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• Lower Upfront Costs: The average cost of buying a new construction home is generally lower than building one. For instance, the median home price in Tennessee is around $383,300 compared to $425,000 for building.

• Immediate Availability: Buying lets you move in faster. You can occupy the property as soon as the sale is done, instead of waiting for construction to finish.

• Established Neighborhoods: Purchasing an existing home often means being part of a community with established amenities and services.

• Potential for Negotiation: In a buyer's market, you may negotiate lower prices or ask sellers to cover closing costs.

• Limited Customization: Buying an existing home may mean compromising on some features or doing renovations later.

• Older Homes Might Need Fixes: Depending on the age of the property, you might face unexpected repair costs shortly after purchase.

On average, buying a home in Tennessee costs about $383,300, while constructing one can reach $425,000 or more due to labor and material expenses. While buying requires upfront costs like down payments and closing fees, there are ways to reduce these expenses, making homeownership more affordable.

Buying a home is a big financial step, but careful planning can save you a lot. Here are actionable steps to help you reduce expenses:

1. Explore Down Payment Assistance Programs: Several states, including Tennessee, offer assistance programs for first-time homebuyers. These programs can provide grants or low-interest loans to help cover down payments and closing costs. If you’re receiving financial help from family, a gift letter for mortgage might be required by lenders to document that the funds don’t need to be repaid.

2. Improve Your Credit Score: A higher credit score can qualify you for better mortgage rates, potentially saving you thousands over the life of the loan. Paying down existing debts and ensuring timely bill payments can boost your creditworthiness.

3. Shop Around for Mortgage Rates: Interest rates and fees can vary between lenders. Obtaining quotes from multiple financial institutions allows you to choose the most competitive offer, leading to significant savings.

4. Negotiate Closing Costs: In some cases, sellers may agree to cover a portion of the closing costs to facilitate the sale. Negotiating these terms can reduce your out-of-pocket expenses.

5. Save on Agent Fees: Traditional real estate transactions often involve a 3% commission fee for the buyer's agent. With commission-free real estate platforms like reAlpha, you can save 3% commission. This lets you use those funds elsewhere in your home-buying journey.

You should also consider loan term options—a 15-year mortgage vs a 30-year loan—as they can significantly impact long-term interest payments.

Later on, you might even recast your mortgage to lower monthly payments without refinancing.

Building a home in Tennessee can cost you up to $700,000, not including land or surprise expenses. But what if you could buy a move-in ready home, skip months of delays, and save up to $12,000 instantly—just by avoiding agent fees?

With reAlpha, you pay zero buyer commission. That’s 3% of the home’s price back in your pocket—money you can use for upgrades, furniture, or even lowering your mortgage.

Save more. Move faster. Stress less.

Let reAlpha simplify your path to homeownership—without the usual costs, fees, or friction.

Start your zero-commission home search now — Tennessee’s smartest buyers are already doing it.

The average cost to build a home in Tennessee is around $425,000, excluding land. Costs vary based on location, materials, labor, and customization. High-end finishes and labor shortages can further increase expenses.

Hidden costs include permit fees, land preparation, utility connections, impact fees, and unexpected material price hikes. Landscaping, driveways, and property taxes can also add thousands to the final cost.

On average, it takes 7-12 months to build a home, depending on weather conditions, labor availability, and supply chain delays. For custom homes or larger projects, the time frame can be even longer.

Save Big when you Buy a Home with reAlpha!

Discover how our all-in-one homebuying platform can increase your buying power and put money back in your pocket. Start your journey today!

Sign up for free