I square my answer the guidance in Publication 936 by the fact that Pub 936 also says:
"Home under construction.
You can treat a home under construction as a qualified home for a period of up to 24 months, but only if it becomes your qualified home at the time it is ready for occupancy."
It's an exception. You cannot have a mortgage secured by a home that has not been built. But the IRS lets you treat the construction loan as if it were a qualified mortgage. Similarly, you can't deduct interest on a home that hasn't been built - it's not a qualified home. But the IRS let's you do so, if it's under construction and becomes your primary residence. You can deduct the interest on your construction loan, subject to the limits on home mortgage deduction.
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