The national market share for new homes was around 16.5% at the close of 2024, with some markets seeing new homes account for 30% to 50% of sales due to the limited supply of existing homes. Sales volume gains in 2025 are expected to be modest, likely in the mid-to-low single digits, and existing home inventory is anticipated to remain constrained until the overall housing supply improves.
Builders focusing on spec homes, particularly those at moderate prices, are expected to experience sales success in the foreseeable future. Why? Many buyers prefer homes ready for immediate move-in, making spec homes an attractive option compared to properties still under construction. Spec homes nearing completion, ready in 30 to 90 days, are more accessible for buyers — they can envision their lives in the near future with more certainty. Given the low inventory in the market, builders should consider selling more spec homes to meet this demand for stability. Not only do market dynamics favor spec homes, but consumer psychology also leans toward inventory-ready options, offering buyers a sense of security and immediacy.
What Is a Spec Home?
A spec home, short for speculative home, is built based on speculation about what homebuyers are looking for. These move-in-ready homes are designed to appeal to homebuyers, including substantial upgrades and amenities so that they will sell quickly and easily. While spec homes offer little to no opportunity for customization, several advantages make up for the lack of personalization. In a competitive housing market, spec homes are often the easiest housing option to purchase, with quick move-in times and no hidden costs or financial surprises.
How to Sell a Spec Home
If your builder has ramped up spec home production to meet market demand, these five tips will help your sales team sell inventory and maximize margins.
1. Stay On Process
One of the most common mistakes sales professionals make when trying to sell a spec home is getting away from the process. For example, a client walks in and says they need to move quickly. Within a few minutes, we're in our car and driving out to show a few different spec homes. If this sounds like the right play, we must talk because it is not. You're guiding the customer through the most favorable thought process, and if you get a sale, you just get lucky. Don't let this scenario throw you off your game. Someone looking for a quick move-in home is an excellent thing for us, but that doesn't process changes. We still focus on building rapport. We still create value for the area, builder, and community. We still do a thorough job with discovery. Only after we've gained buy-in on the area, builder, and community and learned the key wants/needs and emotional drivers should we head out and show the customer the right spec home(s) so we can demonstrate with power.
2. Double Down on the Benefits of New vs. Used
We're of the opinion that every customer that you speak to should be educated on the differences (and value) between new construction and resale homes. If you're not doing this every time, you're cheating the customer, your builder, and yourself by failing to create the right value for your product. This is especially true when we think about spec homes, and in particular for spec homes that will be ready in the next 60 days. We should assume every customer looking at those specs is also looking at a resale. If you fail to create value in this idea upfront, then the customer will treat your spec home as a commodity. They will compare your price to the resale market, and usually not in a good way. Don't let someone judge your $475,000 new home as more expensive than a $460,000 resale. The total cost of ownership of your home is probably lower, but the customer doesn't know that.
3. Keep Options Open
Great salespeople never let doors close unnecessarily in the sales process. We must all learn to recognize that potential buyers are sorting things out as they go along with you. Your prospects are never going to be 100% certain until they sign an agreement, and in some cases, they may not be fully certain even then. Consequently, there's no reason to close the door on a viable option unnecessarily, and you serve your customer better (and set yourself up for success) when you keep the customer's mind open to options as well. For example, imagine a customer telling you they want to build a home from scratch and hope to move in next spring. The follow-up questions might sound something like this: "Help me" understand why that is the ideal timeframe for you. I know you said you wanted to be in something in about ten months, but if there was a home ready in five that was otherwise exactly what you wanted, would you be open to it?" The re "son to ask the first question is to understand their "why." T" e re "son to ask that second question is to test their commitment to the original idea they offered you about timing.
If they respond with a no: "Great," I just wanted to make sure that I gave you the information you wanted. Sometimes people end up buying something that is ready a little sooner because they want to take advantage of interest rates before they rise, so I didn't rule anything out for you." Note: This follow-up is designed as a test again. If they really won’t consider a spec they won’t push back. If they would consider something, they will indicate that they would want to know about the options here; thus, the door is kept open.
If they respond with a yes: "Great, let’s do this. Let’s talk more about what you’re looking for, and if I think we have something that fits that would be done a little sooner, I’ll make sure I bring it to your attention. Maybe that works out well, and you can take advantage of locking in rates sooner." Leveraging this tip will allow you to find inventory sales that you will otherwise miss because you immediately accept their initial time frame as a hard fact and only focus on a dirt sale with them.
4. Interest Rate Urgency
Everyone should understand how interest rate urgency works on a move-in ready spec home. However, have you thought about how to use it on a home that is not going to be finished by November? The basic ideas remain in place. The best targets to buy the inventory home that is just at foundation today is a customer who is thinking about moving in Q1 of 2019 (or beyond). Of course, this customer would have to consider moving sooner if they found the right option for them, assuming they don’t have anything preventing them from moving sooner. "If nothing is blocking you from moving in November, and the home meets all of your wants and needs, why not eliminate the risk of continued rate hikes and lock in the best payment you can, the lowest rate you can, as quickly as you can? Isn't that better than having to sacrifice square footage, features, or homesite because rates climbed and pushed you past your comfort budget, especially when there may be a home that’s perfect for you available sooner?" You should think of this point in conjunction with the third point above.
5. Incentive Values > Cost
If you’re a builder, I bet you’re hoping I’m going to give you a way to sell the specs at full list price and at the same margin as a build job. I wish I could, but we both know that’s just not the way this works. Custom orders in all industries sell for more and provide more profit. However, that doesn’t mean we need to give massive discounts away, even though we may need to give someone a reason to move up and buy that November foundation instead of building. Your goal should be to offer an incentive on your inventory that has a higher total value to the customer than the cost to you and is above and beyond your build job incentive. For example, you won’t reduce the price by $20,000, but maybe you can get the rate down low enough to reduce the payment by the same equivalent. That’s the type of value-to-cost equation that moves spec homes and protects your margins.
If You Build Spec Homes, Buyers Will Come
In the short term, spec homes may be your company's sales driver until the overall housing supply improves. If you're facing other roadblocks, we’d love to learn about your sales needs and how we can help. Find out how you can get more leads, increase your sales productivity, provide better customer service, or all of the above!
