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New Construction Types

There are three types of new construction.  Custom, spec, and tract homes differ in the amount of creative control afforded to the buyer and builder.  The type of new construction you choose will impact your financing options, wait time, and the amount of effort required.

Custom Homes

A custom home is the type of new construction that requires the most effort and the greatest creative control.  Nothing is pre-planned so you start from scratch in selecting the design, features, and fixtures.  If you are building in a neighborhood that is governed by a Homeowner’s association, you will probably need to have your house plans approved by the architectural review board.  Aside from any HOA restrictions that apply, you will have complete creative control.  You purchase the land and hire a team to build your dream home.

The key to a successful build is realistic budgeting.  This is especially true if you plan on financing your new construction with a construction loan.  In addition to purchasing the land and building materials, you will need to cover labor costs.  Generally, you will need to hire the following professionals:

  • Architect: Designs the home
  • Draftsman: Drafts the blueprints
  • General Contractor: Oversees the entire project
  • Project Manager: Works with the general contractor to ensure that deadlines are met according to the budget
  • Structural Engineer: Makes sure the home is structurally sound and can withstand natural disasters
  • Subcontractors: Specialists that complete specific elements of the home like electrical, plumbing, flooring, window installation etc.
  • Designers: Interior and landscape
  • Real Estate Lawyer:  A lawyer will review the required legal documents before you sign
  • Lender: Will provide a construction loan if you don’t have the cash on hand to complete the project


alt="New construction types depicted by a custom brick home under construction"

Spec Homes

“Speculative” homes are designed and constructed by a builder that chooses layouts and finishes according to current trends. A buyer is located after construction is completed or well underway.  Purchasing a spec home doesn’t provide the same level of creative control as custom builds.  On the other hand, you won’t have to wait as long with a move-in-ready home, less effort will be required, and financing is easier to qualify for.


Tract Homes

Tract homes are constructed on tracts of land by a production builder.  They usually offer a handful of layouts to choose from with a specific design that adheres to the community for a cookie-cutter feel.  Buyers can tour model homes to compare the available floorplans and upgrades.  While buyers don’t have a lot of creative control regarding the floorplan, they can select finishes in most cases. Tract homes are usually in gated communities that offer lifestyle amenities such as a clubhouse, fitness center, community pool, and tennis courts.


Deciding between these types of new construction requires you to review your budget for a home purchase.  If you plan on financing, it will be more difficult to qualify for a custom home build than a spec or tract home purchase.  A custom home build will also require a greater commitment of time and effort.  However, if you want full creative control and are willing to wait, a custom build affords the opportunity to turn your dream home into a reality.

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