What is a Spec Home?
A spec or speculative home is a house that is built with the hopes that it will sell after or before construction is complete. A spec home is different from a custom home in that the owner or builder or investor builds a spec home hoping to sell it. A custom home is contracted to be built by a prospective home owner that is planning on moving in once construction is complete.
With the downturn in the housing market over the last decade, speculative homes have become rarer and rarer. Many home builders became unwilling to risk putting their money in spec homes, lacking confidence that they would sell for a decent profit following completion.
Many builders have had to turn to co-signors to get banks to loan them money: See article here on Minnesota Builder using co-signer to finance spec home building.