So, there are some new construction townhouses being built across the street from me that are pre-sold. The listings on realtor for the townhouses were posted last April (over a year ago), and they still look like they have months to go before anyone can move in.

Can someone explain to me how this works? Do you just sign a contract, or have to put up some sort of capital - surely you don't have a loan on something you can't live in yet?

We currently own a townhouse, so our down payment money for our next home is tied up in our property. If we were interested in new construction down the road, and capital for it was tied up in townhouse (which we would need to live in if it took a year to build like these townhouses!), how does the logistics of financing work?