They are common in lots of places. I live in one in Thailand. Why do builders buy lots? Two reasons. If the consumer buys the lot, he doesn't choose a home, he chooses a builder. This means some builders won't be chosen. They have to pay workers, equipment leases, and so on, but they don't have any income. They can't expand. So why not buy 30 lots (or 300) all at once. Then you can plan for a steady flow of work for the next year or two, buy materials in large quantities, double his workforce, etc. Its dumb to do it any other way. Do you want to build cars and sell them, or let customers buy iron ore and then choose a stamping mill to make body parts and a machinist to make an engine. What a disaster that would be.

Also, if you buy a lot, then choose a builder, you move into your new house in 18 months. Can you pay the mortgage where you live, plus the loans on the new land and construction for that long? If the builder already completed the house, you can choose it and move in in two weeks. Why would a consumer want to buy iron or, then select a car maker when she can go to the Toyota dealer and drive away the same day?

Here's how my business works. I am a real estate developer and a builder. I might buy a farm and divide it into 60 home sites. I put in streets, sewers, street lights, and maybe a golf course. I will begin construction on five homes. You can buy (1) a lot and hire your own builder, (2) a lot and hire me to build a custom home, or (3) one of my finished homes. After I build five homes (thats all I can pay for at once) and sell them, I start five more. I know I can stay busy for two years. I don't worry about getting customers. I am my own customer.