What is a New Construction Home?

A new construction home is a property that is newly built or still being built and has not previously been occupied as a residence. Buyers may purchase a new construction home before construction begins, while it is under construction, or after it is completed.

The term “new home” can be broader. A home can be new to a buyer without being newly constructed, while a new construction home specifically refers to a property that is recently built or currently being built.

New construction homes can range from production homes in large developments to semi-custom and fully custom properties. Whether you’re buying a home in Charlotte, NC, or building a property in Phoenix, AZ, understanding the different types, how to buy a new construction home, and what to expect from the builder can help you decide whether a new build is right for you.

What is considered a new construction home?

A new construction home is a newly built property that typically has not had a previous owner or occupant. It may be a completed home that’s ready for move-in, a property that’s currently being built, or a home that hasn’t broken ground yet.

New construction homes are commonly built by professional home builders and developers. They may be part of a larger community with multiple homes and shared amenities, or they may be individually built on a buyer’s lot.

A buyer can also work with a builder to construct a home based on their own plans and specifications. The amount of control the buyer has over the home’s design depends on the type of construction and the builder.

What are the different types of new construction homes?

New construction homes aren’t all built or sold the same way. The biggest differences typically involve how much of the home is predetermined and how much the buyer can customize.

Spec homes

A spec, or speculative, home is built by a builder without a specific buyer already committed to purchasing it. The builder typically selects the floor plan, finishes, fixtures, and other features based on what they expect buyers in the area will want.

Because many decisions have already been made, buyers may have limited opportunities to customize a spec home. The tradeoff is that a completed or nearly completed spec home may allow the buyer to move in sooner.

Production homes

Production homes are generally built in larger communities using a selection of established floor plans. Buyers may be able to choose from available layouts, finishes, appliances, and upgrades, although the options depend on the builder and when the home is purchased.

Because builders repeat established designs and construction processes, production homes can offer a more standardized buying and building experience.

Semi-custom homes

Semi-custom homes provide more flexibility than a typical production home while still working within a builder’s existing plans or design framework. Depending on the builder, buyers may be able to modify the layout or select from a broader range of finishes and features.

The available choices can vary significantly, so buyers should ask the builder which changes are permitted and whether they will affect the price or construction timeline.

Custom homes

Custom homes are designed around the buyer’s preferences rather than being selected from a builder’s standard plans. Buyers may have more control over the layout, materials, finishes, fixtures, and structural features.

That additional flexibility can also make the process more involved. Buyers may need to make more decisions and should expect customization to potentially increase both the cost and construction timeline.

When can you buy a new construction home?

You don’t have to wait until a new construction home is finished to purchase it. Depending on the builder, homes may be available for purchase at several stages:

• Before construction: The buyer selects a lot, floor plan, and available options before building begins.
• During construction: The home is already being built, and some selections may still be available.
• Near completion: Most major construction and design decisions have already been made.
• After completion: The home is finished and may be ready for the buyer to move in.

The stage at which you purchase can affect how much customization is available. Buying earlier may provide more opportunities to select finishes or make changes, while purchasing a completed home can provide more certainty about exactly what you’re getting.

How does buying a new construction home work?

The process varies by builder, but buyers generally start by selecting a community, lot, floor plan, or completed home. If the property is being built specifically for the buyer, they’ll make selections from the options the builder offers.

The purchase agreement will outline the home’s price, included features, construction terms, and other conditions. Buyers should review the agreement carefully and understand how the builder handles changes, delays, deposits, warranties, and closing.

“New home builders have a different contract and slightly different process than buying a resale home,” says Justin Cofield. “It’s helpful to have a Realtor represent you in a new construction purchase to answer questions, negotiate, and keep an eye on build timelines. First-time buyers also need to consider costs such as HOA fees, private mortgage insurance, and MUD or PUD taxes that may be added to their monthly payment.”

Before closing, buyers generally have an opportunity to walk through the completed property and identify items that need attention. An independent inspection can also provide another assessment of the home’s condition before the purchase is finalized.

What is included in the price of a new construction home?

The advertised price of a new construction home may not be the final cost. Builders can offer a base price that covers standard features while charging separately for certain structural options, finishes, appliances, lot characteristics, or other additions.

“Many buyers walk through a beautiful model home without realizing that much of what they are seeing may be an upgrade,” says Dell Jeanty. “I always tell buyers to ask for a written list of what comes standard, read the builder’s contract carefully, and be prepared for the completion date to change. The base price is seldom the final price, since lot premiums, design-center selections, appliances, window treatments, landscaping, HOA fees, closing costs, and possible rate-lock extensions can quickly increase your budget.”

Depending on the property, buyers may also encounter costs for landscaping, fencing, window treatments, driveway extensions, utility connections, or other site-specific expenses. Ask the builder for a detailed breakdown of what is included and what will cost extra before setting your budget.

What should you know about new construction upgrades?

One of the major decisions buyers may face is whether to purchase new construction upgrades through the builder or make changes after closing. Not every upgrade needs to be completed during construction, particularly when the feature is primarily cosmetic.

“The upgrades that pay off long-term are the ones tied to square footage, efficiency, or structure, because you’re paying construction-cost pricing instead of renovation-cost pricing,” says Tara Williams. “Extra square footage, a bumped-out kitchen, higher ceilings, better windows, upgraded insulation, and a higher-efficiency HVAC system can be cheaper to build in now than to add later. I also recommend considering features that future-proof the house, such as an EV charger circuit, extra electrical capacity, or a basement bath rough-in. Cosmetic items like light fixtures, built-in speakers, upgraded blinds, and carpet are often easier to change after you move in.”

When evaluating an upgrade, consider whether it would be difficult or expensive to add after construction. Structural changes and features located behind walls or under slabs can be more disruptive to retrofit, while many decorative finishes can be changed later.

What other costs should you consider with new construction?

The purchase price isn’t the only expense to consider when buying a new construction home. Depending on the property, buyers may also need to budget for items that aren’t part of the builder’s standard package.

“The advertised or base price of a new construction home may not reflect the total cost of the finished home,” says HomeTeam4u. “What’s included can vary by builder and property, so buyers should understand exactly what is and isn’t included before moving forward. Buyers should also ask for a clear breakdown of what’s covered and understand how the builder handles pricing and approval for changes requested during construction. Building some flexibility into the overall budget can help prepare for costs that may arise along the way.”

Site-specific expenses can vary based on the property and location. Before committing to a purchase, ask the builder about utility connections, grading, landscaping, fencing, and other costs that may not appear in the advertised price. Buyers who are financing a home that is still being built may also need to consider a construction loan or other specialized financing, depending on the type of purchase and lender requirements. These loans can have different terms, fees, and payment structures than a traditional mortgage, so it’s important to understand the financing options available before construction begins.

What should you know before buying a new construction home?

Buying a new construction home can involve more decisions and moving parts than some buyers expect. In addition to choosing a property and making design selections, buyers may need to manage construction timelines, financing deadlines, inspections, and communication with the builder.

“Many buyers assume that purchasing new construction is simpler than buying a resale home because everything is new,” says Milica Vasiljevic. “In reality, the process can involve builder contracts, construction timelines, design selections, inspections, financing deadlines, and costs that are not always included in the advertised price. Buyers should research more than the model home by looking into the builder’s reputation, warranty program, construction quality, communication practices, and history of completing warranty repairs. Speaking with current homeowners and visiting completed sections of the community can also provide valuable insight.”

A model home can show you what a finished property could look like, but it may include upgrades that aren’t part of the standard package. Ask the builder for detailed specifications and visit completed homes or communities when possible to get a better understanding of the finished product.

What are the benefits of buying a new construction home?

A new construction home may appeal to buyers who want a recently built property without taking on the immediate updates that can come with an older home. Depending on the property, buyers may also get newer appliances and systems, modern layouts, energy-efficiency features, and a builder warranty.

Buyers may also have an opportunity to select finishes or customize certain features when purchasing early enough in the construction process. The amount of choice depends on the builder and type of home.

What are the drawbacks of new construction?

New construction can come with construction delays, additional costs, and a longer buying process. Buyers purchasing before completion may need to plan around an estimated completion date that can change.

The level of customization can also require buyers to make many decisions, particularly with semi-custom or custom homes. Understanding the builder’s process and timeline before signing can help set realistic expectations.

Should you get an inspection on a new construction home?

A new construction home can still have issues that aren’t immediately visible. An independent home inspection can give buyers another assessment of the property’s condition and identify items that may need attention before or after closing.

Buyers should also understand the builder’s warranty, including what it covers, how long coverage lasts, and how repairs are handled. Keep documentation of inspections, warranties, and communications with the builder for future reference.

Is a new construction home right for you?

A new construction home can offer a recently built property, modern features, and, depending on the type of home and stage of construction, opportunities for customization. However, buyers should look beyond the advertised base price and understand the builder’s process, contract, timeline, and available options.

Before purchasing, compare the total cost of the home, the level of customization available, the expected timeline, and the builder’s reputation and warranty. Understanding these factors can help you determine whether a new construction home fits your needs and budget.

FAQ about new construction homes

Is a new construction home the same as a new home?

Generally, yes. A new construction home is newly built and typically has not previously been occupied. However, a completed new home may have been built before a buyer purchased it, while another new home may be purchased before construction begins.

Can you negotiate the price of a new construction home?

Sometimes. Builders may have different flexibility depending on the local market, the stage of construction, inventory, and their current incentives. Buyers may also be able to negotiate concessions or incentives rather than the home’s base price.

Do new construction homes come with a warranty?

Many builders provide warranties covering certain aspects of a newly constructed home, but coverage and terms vary. Review the builder’s warranty carefully so you understand what is covered, for how long, and how claims are handled.

Should you get an inspection on a new construction home?

An inspection can still be useful even when the home is brand new. An independent inspector can identify potential construction issues before closing and give the buyer an additional assessment of the property’s condition.

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