Spec Homes Sitting on the Market Pose Potential Economic Drag
Builders might pull back on new housing construction as they try to clear their backlog.
By definition, a spec home is one built without a purchase contract in place, exposing the firm to some risk if a buyer can’t be found quickly.
Photographer: Daniel AckerThe so-called spec home, a spin on the American dream home with standardized color schemes and toilet fixtures, is falling out of favor with some US builders. While that means deals for buyers, the trend also could wind up as a drag on the economy.
Spec, or speculative, homes are usually more affordable and available much more quickly for people who don’t demand their own personal touches. Since the start of the Covid-19 pandemic, when the supply of previously owned homes hit a historic low, construction of spec homes jumped 41%, Census Bureau data show. Even higher-end firms more accustomed to building homes under contract shifted heavily toward specs, which the industry prefers calling “quick move-ins.”