For builders, the push and pull between speculative homes and built-to-order (BTO) homes is a classic struggle, reflecting the desire to balance operational efficiency against market demand. A favorable mix directly dictates a company’s profit margins, inventory risk, and customer satisfaction.
Spec homes allow builders to more directly compete with resale inventory, offering faster move-ins that can capture demand from buyers looking to move quickly. In strong markets, heavier spec exposure can increase sales velocity. In slower markets, builders with large levels of spec inventory are exposed to carrying costs and pricing risk.
A built-to-order approach reduces that inventory risk and offers buyers greater personalization in their final purchase. Built-to-order homes typically carry higher sales prices and translate into healthier margins while requiring buyers to wait longer to move in.
While several companies are steadfast in their approaches, such as the 100% spec commitments of Meritage Homes and CBH Homes and the 70% BTO target set by KB Home, the spec-BTO balance often shifts over time.
In the immediate post-pandemic period, many builders leaned more heavily into spec production. Unprecedented levels of demand and rapidly rising home prices set a backdrop for many large builders to offer more spec and quick move-in (QMI) homes because homes were absorbed at record levels. Similarly, the standardized production and simplified SKU packages helped builders guard against pandemic-related supply chain disruptions and labor shortages.
When mortgage rates began to spike in late 2023, a go-to-market approach with spec production remained prevalent to help buyers with certainty of price and move-in timing. Public builders at the time noted buyers were less willing to commit many months ahead given rate uncertainty and favored move-in ready homes. Builders favoring a heavier spec production mix were able to lean into financing incentives in the form of price cuts and rate buydowns to capture demand as economic uncertainty began to mount.
At the end of 2025 and beginning of 2026, one of the more notable themes to emerge is a more concentrated shift toward a higher built-to-order mix. KB Home began sharing its goal of a 70% BTO mix in the second quarter of 2025, noting the approach is customer-centric and that a design-
forward, personalized approach is a differentiator in a market where incentives were prevalent.
“Our buyers choose their lot, floor plan, and personalized finishes. The result is a home that has a real specific value to the people who will live in it,” president and CEO Rob McGibney said during an earnings call with investors. “Homes built to customer specifications do not require heavy incentives to sell.”
Similarly, in the past couple quarters PulteGroup has highlighted its efforts to skew production more toward BTO homes, targeting a 60-40 mix.
“Our decision to build more spec homes once supply chains collapsed and build cycles effectively doubled was the right one at the time, but we much prefer having a growing backlog of sold homes,” PulteGroup president CEO Ryan Marshall shared during a recent earnings call.
The shift is not just occurring among large public builders, with Texas-based Stylecraft Builders reporting a shift toward the BTO model. After carrying essentially no to-be-built volume as recently as 12 to 18 months ago, the company is targeting a goal of 20% to 25% of sales from BTO orders.
Spec-heavy, BTO-heavy, and hybrid operators are all succeeding in the current challenging market. Rather than converging toward a single model, many builders increasingly view spec and BTO homes as complementary tools that can be adjusted based on market conditions, buyer behavior, and community characteristics.
Flexibility Over Fixed Formulas
For many builders, spec homes and BTO homes are not an either-or strategy, and a flexible approach that puts buyers front of mind yields the most successful results.
“They serve different customer needs and we want to execute both approaches well,” David Weekley Homes chief operating officer Ladd Fargo tells BUILDER. “The approximate mix depends on the market, buyer behavior, product type, and price point.”
The by-market approach is one that resonates strongly with Trumark Homes. As a private builder that serves as the western hub for Daiwa House, Trumark Homes leans into the local expertise of its division operators to meet the market with the best approach across its operating platforms in California, Colorado, and Washington.
“We know that we have strong operators in all our markets, and we trust our division teams to understand their buyer profiles, have a pulse on the competition, and utilize the data and tools available to plan accordingly,” Trumark Homes chief operating officer Steve Kalmbach says. “We will continue to be nimble and make the best strategic decisions for each community along the way.”
Fred McConnell, vice president of brand and performance marketing at Risewell Homes, tells BUILDER the company has become more intentional about creating built-to-order opportunities while maintaining a strong offering of quick move-in, spec homes. The mixed approach allows Risewell to be both consumer-led and market-responsive while aligning the company’s core brand platform, Built Well to Live Well.
“Our goal is to maintain the flexibility to respond to both the consumer and the dynamics of each individual market and community,” McConnell says.
Huntsville, Alabama-based Davidson Homes has seen a shift toward more BTO homes, but the company’s core strategy has not changed. CEO Brandon Jones says the company continues to meet buyers where they are, offering a solution for those who need to move in 45 days or those who want to choose every detail from homesite to interior finishes. He says the market has not picked a winner between spec or BTO and has instead rewarded builders who are disciplined about using both approaches.
“We start with the buyer, not the model. A lot of our industry has moved to one way of building,” Jones continues. “We’ve kept real personalization on the menu because buyers still want it, and we keep inventory on the ground because some buyers can’t wait. If we get the buyer right, the mix takes care of itself.”
Specs, Speed, and Certainty
CBH Homes has been a 100% spec builder since 2019, placing high value on the efficiencies gained in the building process and the simplification it provides to the buyer experience. The efficiencies gained early, from purchasing to scheduling trade partners, provide consistency and synergy that allows real value to be passed on to the buyers.
“Being a spec builder allows us to do what we do best: Build amazing homes quickly, efficiently, and at a price that keeps homeownership attainable,” CBH Homes president and owner Corey Barton explains. “Our buyers can walk through a home, see the finishes, know the price, and know when they can move in. There are fewer unknowns.”
In the current market, where some builders are shifting approaches back toward a heavier BTO mix, Barton says CBH Homes still sees value in its 100% spec approach.
“When rates move or the right opportunity presents itself, our buyers don’t have to wait months for their home to be built,” Barton says. “On top of that, we know if a buyer has the option, they will want to make changes. Not allowing change orders allows us to keep costs down and construction efficiency high. Our goal isn’t to give the buyer a thousand decisions to make. It’s to do the work up front and create a beautiful, professionally designed home they can walk into and say, ‘This is it.’”
“Being a spec builder allows us to do what we do best: Build amazing homes quickly, efficiently, and at a price that keeps homeownership attainable.”
—Corey Barton, CBH Homes
Meritage Homes made a similar transition to an all-spec approach in 2016, focusing on the entry-level segment and leaning into competition with resale inventory. The builder’s shorter cycle times allow it to start homes later while also maintaining its 60-day closing guarantee. CEO Phillippe Lord says that its trade relationships and limited SKU counts set it apart from other builders and provide greater certainty to its vendor partners. While the builder has been market responsive and has increased its portfolio of move-up product given market conditions, Meritage Homes remains committed to its 100% spec approach.
Houston-based David Weekley Homes has leaned more heavily into move-in-ready spec homes to respond to a buyer that is placing more value on speed and certainty. Fargo says the shift has been driven by changes in buyer preferences rather than operational considerations.
“In a more uncertain market, many buyers are less willing to commit far in advance. They want to know what they’re buying, what it will cost, and when they can move in,” Fargo explains. “With quick move-in homes, the goal is not simply to build more inventory. It’s to be thoughtful about which homes we start, where we build them, the price points we target, and when the homes will be available.”
Similarly, Kalmbach notes Trumark Homes is seeing more contingent buyers in the current market. For these buyers, knowing what homes are available within a given time frame can be an important factor when they are looking to move but still must sell their previous home. Spec homes represent a solution for this buyer.
BTO’s Personalized Touch
For builders that have leaned more heavily into a BTO approach, most cite personalization, design, and customer centricity as core factors. By allowing buyers to choose lots, floor plans, and personalized finishes, says KB Home’s McGibney, the company is best able to serve its customers.
“Buyers are already invested in and feel a connection to the homes they created,” McGibney said. “This is in contrast to a speculative business model where incentives are used to create value. In that model, the builder increases the incentives to the point at which the buyers believe they have been adequately compensated for features and finishes they did not choose.”
Erlanger, Kentucky-based Fischer Homes has seen an increase in interest in BTO homes in 2026, with the builder noting many buyers are placing an emphasis on personalization. BTO homes utilize Fischer Homes’ Design Studio, giving buyers the opportunity to select finishes and details that bring a unique vision to life and allowing the builder to deliver a home that reflects the specific needs and preferences of a particular buyer.
“The visibility and predictability that BTO provides translates directly into more efficient operations and more dependable margins at delivery.”
—Rob McGibney, KB Home
Beyond design, KB Home’s McGibney said a BTO-forward approach provides visibility, predictability, and limits risk. When a buyer commits and the company locks in a price, the direct costs can be established before a shovel hits the ground and KB Home knows the margin it will achieve at delivery before a home is started.
“We view this as a fundamentally lower risk profile than a speculative model, where a builder starts a home with an assumption for the future sales price and then finds later, at the time of sale, that market conditions may require price reductions or heavy incentives,” McGibney said. “The visibility and predictability that BTO provides translates directly into more efficient operations and more dependable margins at delivery.”
PulteGroup’s shift toward increasing built-to-order homes reflects the preferences of move-up and active-adult buyers. The builder’s lower cycle time allows it to selectively use rate buydowns to facilitate BTO sales while still achieving higher margins than on spec sales.
“[Move-up and active-adult buyers] are individuals who expect choice, and our operating model allows them to choose their preferred lot and select the options and upgrades they desire,” Marshall said.
For luxury builder Toll Brothers, the company can provide a design-forward experience even to spec buyers given its timing and approach to sales. The builder is focused on selling specs as early as possible in the construction cycle to allow personalization through its design studios, providing an experience that is like the BTO experience in all but name.
What Shapes the Mix
Several builders say the spec-versus-BTO decision is often less about philosophy and more about the product being sold and the customer buying it.
Decisions are closely tied to what different buyer segments prioritize in the purchase process. For entry-level buyers, value is often concentrated in price, payment certainty, and speed, characteristics that favor a spec approach. Move-up buyers, by contrast, are often purchasing for the home itself and have greater flexibility to prioritize personalization and design choices over speed.
“A first-time buyer is usually solving for payment and timing. A move-up buyer is solving for the home itself,” Jones of Davidson Homes explains. “Spec answers the first. Built-to-order answers the second.”
Kalmbach of Trumark Homes adds that buyers who are seeking customization in the home buying process are more likely to have the resources and time to engage earlier in the purchasing process, beginning with lot selection and continuing through the full design process. Fargo of David Weekley Homes echoes this distinction: standardized, higher-density, and entry-level products generally lend themselves more naturally to move-in-ready construction while higher-priced, customizable homes are better positioned for BTO.
“In general, building from the ground up allows customers the opportunity to personalize their home and participate more fully in the home building process,” says Fargo. “The longer timeline also gives our team members more time to understand the customer, build a relationship with them, and help create a home that is right for them. That relationship and the experience we provide the home building process are things we value.”
