Three Types of New Construction Home Builders

Certainly! When it comes to new construction builders, there are generally three main types: spec builders, production builders, and custom builders. Here’s an explanation of each:

Spec Builders:

Spec builders, short for speculative builders, construct homes without a specific buyer in mind. They purchase land, develop it, and build homes based on their own specifications and design choices. Spec builders typically build multiple homes within a community or subdivision, often with a similar floor plan and design theme. These homes are completed before a buyer is identified, and they are generally showcased as model homes to attract potential buyers. Spec builders take on the financial risk of building the homes upfront and hope to sell them later at a profit.

Production Builders:

Production builders, also known as volume builders or tract builders, focus on constructing large numbers of homes efficiently and at an affordable price. They typically have a range of pre-designed floor plans and offer a selection of finishes and options for buyers to choose from. Production builders operate on economies of scale, using standardized construction processes and materials. They often have established relationships with suppliers and subcontractors, allowing for cost savings. Production builders tend to develop entire communities or subdivisions with homes that share common features, such as architectural styles or exterior materials.

Custom Builders:

Custom builders specialize in building unique homes tailored to individual buyers’ specific requirements. These builders work closely with clients to design and construct homes that meet their preferences and needs. Custom builders offer more flexibility in terms of design, floor plan, and customization options. They can accommodate personalized features, higher-quality materials, and unique architectural details. Custom-built homes generally come with a higher price tag and a longer construction timeline, as each home is tailored to the buyer’s specifications.

It’s important to note that these categories are not mutually exclusive, and some builders may operate across multiple types, offering a range of services to cater to different buyer preferences.

**Side note from me** In my videos on HHFyoutube.com I often refer to a home I am filming as a spec home. The majority of the builders and communities I visit are production. The spec homes mentioned are homes built that no one owns yet, inside of these big neighborhoods. I usually call them inventory homes but sometimes slip into old habits 🙂