Well, as a novelist who has one published novel and who is working on two unpublished ones, I will answer with the first choice, of course.
“Why?” you are asking.
Firstly, if you rewrite, you might write with a different style than the one you used in the first time. That will make the reader feel as if two people not one wrote the novel.
Moreover, when rewriting, you will be out of the original mood which you experienced the first time. That mood in which the development of the novel and characters takes place as events progress.
It will be very difficult to rewrite, and you will continue comparing the original draft with the new one. You will keep asking which paragraphs to use, the old ones or the new ones.
For all of that, you must aim at writing from the beginning as if you are writing the final version. Do not postpone anything to do later. From the beginning, write descriptions, monologues, dialogues and most importantly all events.
You must be wondering – if all of that is correct – why publishing houses offer editing.
The answer is that editing is different from rewriting. Editing aims at removing mistakes including those related to spelling, grammar, punctuation and facts. Although editing also aims at improving the style in the weak sites of the novel, it only does that for not more than 20% of the written novel. The editor will suggest improvements in certain sites. Whereas in rewriting, you are going to rewrite 100% of the novel.
So, now be ready to write your novel as well as you can from the first time, without aiming to rewrite it. Good luck 🙂