diff --git a/configure b/configure
index d399457a..e7bb7edc 100755
--- a/configure
+++ b/configure
@@ -55,6 +55,8 @@ subdirs="${subdirs} bindings"
 # the directory structure and copy Makefiles.
 if [ "$srcdir" != "." ]; then
 
+    NOTMUCH_BUILDDIR=$PWD
+
     for dir in . ${subdirs}; do
 	mkdir -p "$dir"
 	cp "$srcdir"/"$dir"/Makefile.local "$dir"
@@ -78,6 +80,8 @@ if [ "$srcdir" != "." ]; then
        "$srcdir"/bindings/python-cffi/notmuch2 \
        "$srcdir"/bindings/python-cffi/setup.py \
        bindings/python-cffi/
+else
+    NOTMUCH_BUILDDIR=$NOTMUCH_SRCDIR
 fi
 
 # Set several defaults (optionally specified by the user in
@@ -1247,6 +1251,7 @@ cat > Makefile.config <<EOF
 # directory (the current directory at the time configure was run).
 srcdir = ${srcdir}
 NOTMUCH_SRCDIR = ${NOTMUCH_SRCDIR}
+NOTMUCH_BUILDDIR = ${NOTMUCH_BUILDDIR}
 
 # subdirectories to build
 subdirs = ${subdirs}
diff --git a/lib/open.cc b/lib/open.cc
index a91d22ef..54510eac 100644
--- a/lib/open.cc
+++ b/lib/open.cc
@@ -661,16 +661,12 @@ notmuch_database_create_with_config (const char *database_path,
 
 	err = mkdir (notmuch_path, 0755);
 	if (err) {
-	    if (errno == EEXIST) {
-		status = NOTMUCH_STATUS_DATABASE_EXISTS;
-		talloc_free (notmuch);
-		notmuch = NULL;
-	    } else {
+	    if (errno != EEXIST) {
 		IGNORE_RESULT (asprintf (&message, "Error: Cannot create directory %s: %s.\n",
 					 notmuch_path, strerror (errno)));
 		status = NOTMUCH_STATUS_FILE_ERROR;
+		goto DONE;
 	    }
-	    goto DONE;
 	}
     }
 
diff --git a/test/T055-path-config.sh b/test/T055-path-config.sh
index f0ce55da..1df240dd 100755
--- a/test/T055-path-config.sh
+++ b/test/T055-path-config.sh
@@ -318,7 +318,14 @@ to=m.header('To')
 print(to)
 EOF
 	   test_expect_equal_file EXPECTED OUTPUT
-	   ;& # fall through
+	   ;;
+       *)
+	   backup_database
+	   test_begin_subtest ".notmuch without xapian/ handled gracefully ($config)"
+	   rm -r $XAPIAN_PATH
+	   test_expect_success "notmuch new"
+	   restore_database
+	   ;;
    esac
 
    case $config in