Published: Aug 14, 2019 | Updated: Sep 26, 2023

Do Custom Homes Cost More Than Spec Homes?

Are custom homes more expensive than spec homes? Are there any benefits of building a custom home vs. a spec home?

Building your dream home is one of the most important decisions you will make. So it's important to understand your options in the home-building process. For single-family homes, you have your choice of pre-existing homes, production homes, spec homes, and custom homes.

A spec (or speculation) home is a new house that was built by a home builder in the hopes that home buyers will come along and buy the house after it is built (or possibly even during construction). Builders make spec homes to appeal to a wide audience. They are generally rather generic, unless you find a luxury home builder.

A home buyer usually has little or no input into the details of a spec home, unless you buy one before the finishes are done. Most everything is already decided by the builder in advance.

A custom home is made specifically for one buyer and tailored to that person's particular desires and needs. The buyer actually chooses the design or helps to design the home personally. And the buyer selects all of the finishes and materials that will be used. A home buyer has much more control over the final product with a custom home than with any other type of home.

Other types of homes are also available including existing homes and production homes. Buying an existing home is often the least expensive route to go upfront. But older homes often have work and maintenance that need to be done.

Production homes are a type of new home that a buyer can choose to build where there is a limited menu of choices for floor plans, finishes, and materials. The home is slightly customized for the buyer. But there are significant limits to the buyer's freedoms in choice.

Spec home cost per square foot is generally less than a comparable customized production home or custom built home up front.

The cost to build for comparable homes generally looks like this:

Pre-existing Home < Spec Home < Production Home < Custom Home

Spec homes

Every type of home has its pros and cons. An option that works best for certain people may not be a good fit for others. The key is to make sure you find the style of home that works best for your family’s needs.

Spec home advantages

Brand new home.
Move-in ready.
No/very little wait time for construction.
No/fewer decisions to make at all about finishes, colors, etc…
Generally, less expensive construction cost for a comparable home.
Walk through it, see it, and touch it before buying.

Production builders are usually able to produce more homes more quickly than custom builders. Buying a spec home may be a good choice for those home buyers who don't have as many preferences with the details and don't care about having a lot of choices.

They especially appeal to buyers who are in a time crunch, who want to move into a new home right away. These homes are perfect for home buyers who value a fast home building process over a customized one.

Spec home disadvantages

Generally, very few (or no) changes can be made before closing, unless you find it earlier in the build.
The floor plan is fixed.
No choice with lot or neighborhood.
Usually, faucets, hardware, counter tops, and finishes may not be what you like, unless your builder waits to allow the homebuyer to choose the finishes.
The house will be rather generic, or, at the least, possibly not best for your specific needs and desires.

If you happen to find a house that is still under construction, you may get to have some say in flooring, paint colors, hardware, and appliances. But you still won’t have nearly as many customization options with spec houses as you would if you were having a production house or custom home built.

Custom homes

A custom home builder has much greater freedom to build your exact dream house than any other builders do. Just like with a personally tailored suit vs. one off of the rack, you do pay a bit more in price per square foot to build a house just for your family but you also get something that is the perfect fit, in the end.

It may also be able to continue to meet your family’s needs for a much longer time, if you are able to plan ahead a bit.

Custom built homes run between $100-$400 per square foot in 2019 (per Homeadvisor), not including the cost of the lot, according to Home Advisor. Your home builder can give you the most accurate estimate per square foot for your particular project.

Keep in mind that you have control over your budget with a reputable, experienced custom home builder. You can decide what your budget is and what materials you want to use. You get to call the shots.

Disadvantages of custom homes

Higher cost upfront.
Longer build time.
More decisions to make.
If the home too specialized, resale can be more difficult.

For buyers who are pressed for time, who don’t care about many details, or who feel overwhelmed at making a lot of decisions, a custom home may not be the best fit. But there are a lot of benefits of building a custom home to carefully consider, as well.

Advantages of custom homes

Choose your own lot location and size.
Hire your own architects and designers or design the house yourself.
Be very involved in every decision about the construction.
Retain the most control possible over the finished product (unless you decide to be your own contractor and do all of the work yourself).
Unlimited options for floor plans, options, finishes, and materials.
Potentially save money in the long term because you got the home you needed and don’t have to renovate or add on to the house later.
Choose custom appliances and features not offered in production homes.
Make the home as green and environmentally friendly as you want.
Build with the highest energy efficiency you desire.
Build with universal design in mind so that the home can meet your needs both now and in the future.
The home is uniquely yours and everything in it will suit your tastes.

Home buyers who want custom homes are generally people who have very discriminating taste, who know exactly what they want, and who greatly value quality. They appreciate attention to detail and want things to be perfectly tailored to their needs and preferences.

Are custom homes more expensive than spec homes? Yes, the upfront cost may be a bit more. But the total cost may actually be less if you don't have to do a lot of home improvements later. And most importantly, with a custom home builder, you have the ultimate flexibility and control in every area of your home.

You can choose to make the home design as complex or simple as you like. You get to decide on your budget and priorities. If you care deeply about many aspects of the design of your dream home, you have important concerns that you don’t want to compromise on, and you want to be as involved as possible, (without actually building the house yourself), hiring a custom builder may be for you.