Custom vs. Speculative vs. Production: Choosing the Homebuilding Journey

I had no idea how many different ways there were to go about building a new construction home. The terms "custom," "speculative," and "production" homes kept coming up, and I quickly realized how important it was to understand the differences before making a decision.

Now that I’ve been through the process myself, I wanted to share what I learned — from a homeowner’s perspective — to help anyone else in the same shoes.

🏠 Custom Building: Designed Around You

Custom building was ultimately the route I chose, and here’s why: it gave me the freedom to design every detail of my home to suit my lifestyle. From the layout and functionality of the kitchen to the direction my bedroom faced the sunrise, I had full creative control.

What I loved most was the collaboration. I worked closely with an architect and a builder to bring my vision to life. Yes, it required more time and effort — there were countless meetings, selections, and decisions — but the result was a home that feels 100% me.

Pros:

• Completely tailored design

• Choice of location and finishes

• Close involvement in the building process

Cons:

• Longer timelines

• Higher costs due to customization

• Requires more personal time and input

🧱 Speculative (Spec) Building: A Middle Ground

Before going custom, I considered a speculative home. These are homes that builders construct without a specific buyer in mind, but they’re built with popular features that appeal to a wide market. Once the home is built (or nearly done), it goes up for sale.

I walked through a few spec homes that were beautifully done, and truthfully, they could have worked for me with a few tweaks. You typically don’t get to choose everything — maybe some finishes or appliances — but they offer a quicker move-in and a bit of a cost break compared to custom.

Pros:

Faster move-in

Less decision fatigue

Often located in desirable neighborhoods

Cons:

Limited customization

You may need to compromise on layout or style

🏘️ Production Building: Homes at Scale

Production builders are the ones you’ll see building neighborhoods, often with a few preset floor plans and finish packages. I toured a few of these communities, and while they’re efficient and offer good value, they felt a bit too “cookie-cutter” for my tastes.

You usually pick from a menu of layouts and options — kind of like ordering off a set menu rather than creating your own dish. For someone who wants a smooth, budget-conscious process with fewer decisions to make, this could be ideal.

Pros:

• Lower cost per square foot

• Faster build times

• Streamlined decision-making

Cons:

• Limited design flexibility

• Neighborhoods may feel repetitive

• Less personal touch

Building a custom home costs more than a production home due to several factors, including higher material and labor costs, the need for specialized labor, and the individualized design implications during construction. Production homes benefit from economies of scale, utilizing standardized designs and pre-selected materials, leading to lower overall costs.

Custom Home Building is a very rewarding experience, but there are additional considerations that potential homeowners need to know.

1. Cost and Timeline Uncertainty:

Production homes have more cost certainty because that builder has built that home over and over again and they have favorable pricing on materials as they buy in bulk. Custom building has a process that goes from estimating, to bidding, to executing contracts with trades once the scope is fully understood, which comes after the architectural plans are created and you are ready for construction.

Timelines can be longer because of the unique and additional steps necessary to build YOUR home. Feasibility, lending, design, permitting, bidding, construction, finishing, and getting everything to pass inspections with the local municipality.

Every decision like square footage, window sizes, siding, flooring, appliances, really all building materials will manipulate the budget as you make upgrades to the features in the home.

2. Location and Site Preparation:

Site preparation and any necessary improvements to the land add to the overall cost. The property you choose will come with expenses associated with site development, engineering and permitting controlled by the local municipality.

Where you build will have a massive impact on the overall costs. As a lot of the cost to build is labor costs, the local cost of living and the scope of work will control labor pricing.

3. Architecture, Interior Design, and Permitting Fees:

Hiring an architect to design a custom home will add to the overall cost, but it is imperative that these plans are high quality as they will lead to less issues in the field. Design changes and revisions during construction can also incur additional fees and will increase the build timeline.

Interior design is also very helpful. There are so many decisions that need to be made during the custom process that many people experience decision fatigue. In addition to the look of the finishes, good interior design helps a great deal during construction. Layouts and elevation drawings help us in the field with placement of lights, tile layouts, cabinetry, and all custom features.

Permitting fees vary from each municipality, but we encourage you to do research into your specific location to understand these expenses in advance!

CONTACT A HOME BUILDING EXPERT