What Is a New-Construction Home?

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Published May 15, 2023
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There’s nothing like a brand-new house. The appliances are modern, the bathrooms have never been used, and the walls are spotless.

When you buy a new-construction home, you’ll be the first to break it in and enjoy all of its features. If you buy the home before it’s built, then you’ll even get to participate in the design process.

Here’s what you need to know about buying a new-construction home.

What Does New Construction Mean?

A new-construction home is a home that was built in the last year and hasn’t had anyone live in it yet. You can buy a new-construction home that’s ready to live in, or purchase one before it has been built so you can work with the builder and help design it.

The latter option gives you the ability to customize different elements of the home to your taste. However, this will come with added costs, such as hiring professionals and paying for materials.

“A buyer may purchase a vacant piece of land and hire the various contractors needed to build a property on that lot,” says Jonathan Rundlett, president of Exit Realty Mid-Atlantic in Bethesda, Maryland. “New-home builders typically purchase a large piece of land and coordinate to build multiple homes on that land and offer the new homes for sale to the public. They often have a model home that is built first that will showcase the style of home that will be built in the subdivision so buyers can walk through and see all of the features.”

According to a U.S. Census Bureau report, about 25% of new-construction homes are sold after they’ve been built, while the other 75% are sold before or during production.

Different Types of New-Construction Homes

  • Custom homes. Typically, custom homes are luxury properties built with specific input from the buyer. A professional designer is often brought in to offer upscale architectural design and personalized elements for the future homeowner. As a result, this type of new-construction home tends to be more expensive and take longer to build.
  • Spec homes. Spec homes are built before there’s a buyer involved. The builder will typically base the layout and design choices on recent homebuilding trends and homebuyer preferences. If you want to make any changes to the home, you’ll have to handle it and cover the costs on your own.
  • Semi-custom homes. This type of new-construction home can be thought of as a hybrid between a custom home and spec home. With semi-custom homes, the builder will have a general plan for the home and the buyer can request modifications. The buyer may be able to ask for an additional bathroom, but isn’t burdened with the task of designing the home from the ground up. As a result, semi-custom homes are less costly than custom homes and can be completed sooner.
  • Tract homes. Tract homes are built attached to one another on a tract of land. Tract homes follow a cookie-cutter layout and similar floor plan. Because they’re built to efficiently use the plot of land, tract homes are more affordable.

New-Construction Homes vs. Existing Homes

The key difference between new-construction homes and existing homes is that new-construction homes are less than a year old and have never been lived in, while existing homes are older and have had previous occupants. Existing homes are purchased from the previous owner, while new-construction homes are purchased from a construction company.


Here are the answers to some frequently asked questions about new-construction homes.


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