Building? Compare 4 types of new construction homes - Movement Mortgage Blog


Last year we blogged on tips for building or buying a new construction home. This time we’re looking at the four types you should be familiar with: 

  • production homes
  • fully-custom homes
  • semi-custom homes
  • spec homes


All four come with tons of benefits, the most obvious of which is that you’re the first family living in the space, so no worn-in feeling (or problems or smells) from the previous owners. But since they are new, you’re also likely to get a modern and contemporary design, energy-efficient appliances, a builder’s warranty and smart-home features like alarm systems, learning thermostats, smart locks and video doorbells.


While each of the styles allows for varying degrees of personalization, there are some general truths about each that are good to be aware of. These details will help you know what to expect and decide which is the best option for your family.


Production homes.


Typically built in clusters, production homes are commonly found in suburban and, increasingly, rural areas. If you’ve ever had a window seat on a plane, you’ve probably seen these developments from the air. They are easily identifiable as concentrations of similar-looking homes nestled together on cul-de-sacs. 


Builders of production homes have usually purchased a large tract of land — which is why this type of new construction was once known as “tract homes” — and then divide it up into individual lots and let prospective owners select the lot that meets their needs and budget. 


Buyers can typically choose from a few different floor plans, exterior design options and building materials like carpeting, flooring, cabinetry, countertops and other fixtures and finishes. Some floor plans may also allow for a ‘bonus room’ like a guest bedroom or home office. This variety helps keep the new neighborhood from being too “cookie-cutter” as not every house will be identical. 


The streamlined approach to this type of construction, plus the fact that builders know exactly how much it’ll cost to build, makes production homes an affordable option, especially for first-time homebuyers. 


Fully-custom homes.


Just as the name implies, fully-custom homes are built one at a time. They’re made from scratch to your specifications, down to the wall outlets and trim. For these reasons, building a custom home is a lifelong dream for many buyers. It’s also the most expensive on this list of new construction homes.


Prospective homeowners will need to hire an architect and a home builder to create a floor plan and design a home according to your direction, vision and budget. On that last point, expect to go over budget, because you probably will. Then, after you sign off on the plans, a licensed engineer needs to validate that the new home will be structurally sound. 


When building a custom home, you’ll either buy the property from a builder or find a builder to build your house on a lot you already own. Most likely, a builder’s lot will already be prepped. If you’re building on your own property, it may need some site preparation services. These can include tree removal, excavating, putting in a septic tank and arranging for utility and water hookup. All this, plus the necessary local government oversight and approvals, means a fully-custom home takes much longer to build. 


Semi-custom homes. 


Semi-custom homes are like a mash-up of a production home and a fully-custom home. With a semi-custom new construction home, you’ll have more say in the layout and stylings of the space than you might with a production home, but fewer than if it were a custom home built from the ground up. FYI: many production home builders also build semi-custom homes, sometimes in the same planned community development. The advantage of the semi-custom home is that you’ll have more options and more flexibility. 



That’s not to say that you can’t build a semi-custom home on land that you already own (or are purchasing). If that’s the case, your builder will still provide you with multiple home plans to choose from that will match your budget and make sense for your property. As the buyer, you can ask for small changes to the plans, like lighting fixture styles, luxury flooring, high-end appliances and top-of-the-line energy-efficient heating and cooling systems. But you’re usually unable to alter structural elements as that gets into fully-custom territory with a heftier price tag. 


Builders prefer working with clients on semi-custom homes as they offer the flexibility to give buyers what they want without the hassle of going the fully-custom route. Buyers prefer them because they still feel pretty custom, minus having to go through the expense of hiring an architect, dealing with all the approvals and having a move-in date be nearly a year out. And since builders of semi-custom homes know the floor plans and finishing choices inside and out, they can pretty much stick to the cost and closing dates they agree to at the start. 


Spec homes. 


Spec homes are where builders themselves will choose floor plans, finishes and landscaping and pre-builds a move-in-ready, newly constructed home in the hope that it’ll catch the eye and meet the needs of a buyer in the not too distant future. Spec homes are often built on single lots in established communities, not on tracts of purchased land divided by the buyer.


What’s the benefit to a buyer who gets no customization at all? Well, not every homebuyer is interested in the construction process or has months to wait for their dream home to be built. Spec homes are the perfect solution for those who prefer to take a hands-off approach but want to be the first family in a home. And if they need to move into their new home quickly, all the better. 


Ready to get started?


As you can see, there are many options for buying new construction, whether you’re sticking to a set budget in a planned community, dreaming of building on an empty lot of your own or looking for just a bit of customization to give a newly built home some personal flair. 

Remember, it’s smart to be pre-approved for a mortgage before having discussions with builders. Movement Mortgage loan officers are experienced in all sorts of new construction loans. They are pros at meeting strict deadlines and accommodating moving closing dates that can happen with newly built homes. Find a loan officer near you to get started.

About the Author:

Mitch Mitchell

Mitch Mitchell is a freelance contributor to Movement's marketing department. He also writes about tech, online security, the digital education community, travel, and living with dogs. He’d like to live somewhere warm.