Is it normal that neighborhood spawns at the front of my house?

@aodoherty Hello!  I just tested this in my game and did not see the issue as you describe.  There are three 40x30 lots in Newcrest, so I was wondering which specific lot you had your family move to.

One thing I wanted to note is that since you mentioned the lot was originally supposed to be a Spa lot, it could be that the game still considers it a Spa lot, even when you change it to residential.  This may be causing sims to spawn as if they're going to a Spa venue.  I've had issues with changing the lot type before, where the game still recognizes the lot as its previous type.  For example, I have a gym that I placed on a residential lot.  Even after I changed the lot type to generic, I still have issues with the game thinking it's "residential".  Perhaps you could go into build mode while playing the family living on the lot and double check the lot is set to the residential lot type.  You may even need to save, exit and reload the game for it to take effect.