Do Custom Houses Cost More Than Production Homes?

We are continuing our series comparing the cost of custom homes to other types of homes currently available on the market. When you are prepared to make your dream home a reality, it pays to have all of the information on every possible option for types of builders and homes.

In general, a production home (AKA a tract home, or semi-custom home) will cost less than a comparable custom home. There are pros and cons for each kind of home. Let’s look at the advantages and disadvantages, as well as the reasons behind the pricing difference.

Production homes

A production home is built as part of a master design for home construction for an entire neighborhood. The production home building company owns a large swath of real estate and develops the property to construct many homes in that area in a relatively short period of time.

Advantages of production homes

  • Construction costs are lower due to economies of scale.
  • Home buyers can choose a lot and house plan from the same company which may save time.
  • Wide variety of level of cost, quality, and square footage available
  • There are customization options.
  • Construction time is usually several months shorter than for a custom home.

Production home cost is generally less than custom home cost. On average (per Homeadvisor), the savings can be about 15% or possibly 20-30% in some cases for comparable homes. Of course, the exact cost per square foot of a particular home depends on what materials you use, the cost of the land, how complex the build is, as well as a variety of other factors.

Disadvantages of production homes

  • Options for floor plans are quite limited and major changes usually cannot be made during construction.
  • Lots are restricted to specific neighborhoods.
  • Homes in the neighborhood may be quite similar. Some might call them “cookie cutter” houses.
  • You may have to build a home farther away from your job and other conveniences than you’d prefer.

With production houses, you have choices, but not nearly as many choices as you would have with a custom home.

Master Shower

Custom homes

A custom home builder has much greater freedom to build your American dream than any other builder does. Just like with a personally tailored suit, you do pay a bit more to build a house just for you and your family but you also get something that is the perfect fit, in the end.

Custom built homes run between $100-$400 per square foot (Homeadvisor), not including the cost of the lot, according to Home Advisor. Of course, your builder can give you a much more accurate estimate of the cost of your particular project based on your materials, design, and the factors that impact your area.

Disadvantages of custom homes

  • Higher cost.
  • Longer build time.
  • More decisions to make.

For buyers who are pressed for time or who feel overwhelmed at making a lot of decisions, a custom home may not be the best fit. But there are many 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 are less likely to have to renovate, add on to the house later, or sell to buy something that better suits your needs.
  • Choose custom appliances and features not offered in production homes.
  • Make the home as green and environmentally friendly as you like.
  • 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 suits your tastes.

With the freedom you have to make more choices, you can choose to spend more money or not. Ultimately, you have control over your budget and decisions and you will also have the satisfaction of having the exact home of your dreams. A custom home can be a sprawling million dollar mansion, or it could be a smaller, more modest home that simply meets your family’s needs and desires.


The Top 6 Reasons to Choose a Custom Home Builder

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11 Things to Do Now to Prepare for Building Your Dream Home

10 Financial Mistakes to Avoid When Building a New Home

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