diff --git a/lib/dev.js b/lib/dev.js
index 601ff4c2e1..0a0d798b57 100644
--- a/lib/dev.js
+++ b/lib/dev.js
@@ -90,7 +90,11 @@ module.exports = async function dev (sourceDir, cliOptions = {}) {
     }
   })
 
+  const nonExistentDir = path.resolve(__dirname, 'non-existent')
   await serve({
+    // avoid project cwd from being served. Otherwise if the user has index.html
+    // in cwd it would break the server
+    content: [nonExistentDir],
     compiler,
     host: process.env.DEBUG ? '0.0.0.0' : 'localhost',
     dev: { logLevel: 'warn' },
diff --git a/lib/webpack/createBaseConfig.js b/lib/webpack/createBaseConfig.js
index cd09e2749a..a4b3a61213 100644
--- a/lib/webpack/createBaseConfig.js
+++ b/lib/webpack/createBaseConfig.js
@@ -44,16 +44,16 @@ module.exports = function createBaseConfig ({
       .merge(['.js', '.jsx', '.vue', '.json'])
       .end()
     .modules
-      .add('node_modules')
-      .add(path.resolve(sourceDir, '../node_modules'))
+      // prioritize our own
       .add(path.resolve(__dirname, '../../node_modules'))
+      .add('node_modules')
 
   config.resolveLoader
     .set('symlinks', true)
     .modules
-      .add('node_modules')
-      .add(path.resolve(sourceDir, '../node_modules'))
+      // prioritize our own
       .add(path.resolve(__dirname, '../../node_modules'))
+      .add('node_modules')
 
   config.module
     .noParse(/^(vue|vue-router|vuex|vuex-router-sync)$/)