Considering a New Construction Home?

Three Types of New Construction Home Builders Explained

Before you start shopping for a new construction home, it is important to understand the different types of home builders and what you can expect from each in terms of price, quality, and build times so that you can avoid costly mistakes and buyer’s remorse.

Buying a new construction home simple, right? You tour a few models, find a floorplan you like and sign on the dotted line. Wrong. Buying a new construction home is actually a bit more complex.

In this blog, I  walk you through the differences between Twin Cities custom, semi-custom, and tract home builders and talk about the pros and cons of each. 

Tract or Production Home Builders

Tract homes, also referred to as production homes, are typically the least expensive option when buying new construction. Generally, a large home builder will purchase a large tract of undeveloped land and builds multiple similar homes, or neighborhoods of homes, as well as the infrastructure surrounding them, including roads, water, and sewer.

If you buy a home in one of these new developments, you may have the option to choose among a handful of floor plans and a few finishes, but builders don’t allow for much customization. They buy building materials and appliances in bulk, which helps to keep costs down. Because of that, the build time–the time between when you sign a purchase agreement and the time your home is complete and ready for occupancy–may be shorter too.

Right now in the Twin Cities, production home costs typically run between $400,000 and $750,000 dollars and build times are 6-12 months.

Semi-Custom Homes Offer Buyers More Options

New home construction kitchen

Much like the name implies, purchasing a semi-custom home allows buyers more choice in selecting a home’s floor plan and finishes. 

Semi-custom home builders still tend to operate from a set number of home plans, but they are willing to make changes to suit individual buyers’ needs, such as converting a main floor powder room into a three-quarter bath, or turning a den into a bedroom. Buyers can choose their own appliances and some finishes, or go with the builder’s package.

In a Custom Home You Decide

In simple terms, a custom home is a home designed and built for an individual client according to that client’s tastes and needs. Custom homes are the most expensive type of new construction and offer buyers’ the greatest amount of control.

Custom homebuyers can bring their own design plans or work with the builder and an architect to design the home’s floorplan. They can purchase a building lot the builder already owns or find their own lot.

Building a custom home allows the buyer to select all of the finishes and include unique features like solar panels, swimming pools, exotic woods, or green building materials. For some buyers, however, the sheer number of decisions and oversight required during the building process can feel overwhelming. The timeline for building a custom home can vary greatly depending on the size of the home and whether the builder already has an available building lot. In general, prices for custom homes start at about $1 million

Pro Tip: Should You Buy the Builder's Model?

Now for my insider tip. Builders build model homes to attract potential buyers. Buyers can see what a home feels like and assess the quality of the materials and finishes. With that in mind, builders tend to showcase best plans and upgraded finishes and appliances in their model homes. These upgrades that could add tens of thousands of dollars to the price of a new home.


J Trout Lowen is a Minneapolis Realtor® and an expert at helping buyers and sellers navigate the Twin Cities Housing market.

Now that you know what type of new construction home you might want to purchase, check out my last blog in this series: 5 Steps to Buying a New Construction Home.

five steps to buying a new construction home

Compare listings