The homebuilding world is full of confusing (and often misused) terminology. Below we define each of these kinds of home construction:
|Tract Homes||Company||From Builder||Low||Developer Financing||5-12 mos.|
|Spec. Homes||Company||From Builder||Low||Traditional||<6 mos.|
|Semi-Custom Homes||Owner||From Builder||Medium||Construction Loan||9-15 mos.|
|Fully Custom Homes||Owner||Bring Your Own||High||Construction Loan||9-15 mos.|
Custom Home Under Construction
How to Decide?
There's a number of factors involved in making the right decision for your new home:
Location: Tract builders build in sub-division tracts which limits your location to places that developers are currently building. If you have a very specific location or lot in mind then you will need to go semi-custom or custom.
Lot Configuration: Since tracts are specifically developed to subdivide the land into new lots, tract homes are often designed to maximize the number of lots which means smaller and narrower lots with taller and deeper houses. Resultantly, it's fairly rare to find a tract developer who is building single-story homes. If you are looking for a very specific lot then you will likely need to go custom.
Customization: Because of the need to appeal to a broad market of potential buyers, tract and spec homes are designed to appeal to the largest number of people possible. Larger, complicated or specialized builds will all need to be custom.
Cost: Since there's so many variables involved, it's difficult to definitively say that one kind of construction is cheaper than another. The biggest variable for build cost is the developer's profit. Semi-custom and custom homes can be cheaper (ceteris paribus) than tract/spec homes because the owner cuts the developer's profit out of the equation.
Tract and spec homes tend to target the middle of the affordability spectrum because it's safest for a developer to appeal to the median home buyer. As a result, it can be rare to find, large luxurious tract homes.
So tract homes often cost less than custom homes but only because they tend to be smaller and less luxurious than custom homes.
Semi-custom home builders are typically able to offer a lower price than fully custom home builders because it's less risky and less work to use a plan that they've built before. Semi-custom builders often design floorplans to minimize their costs by making efficient use of materials, trusses, and labor.