Yeah, you can. You can build all kinds of furniture, but check this out: http://imgur.com/nxNqUfJ
I'm building my castle lol
I imagine you will need to level up the local leader (I think that's what it's called) rank to really expand the town.
You get to build resource systems, construct homes, and manage settlers.
Clean up the place of debris before building, and make sure you have a good idea of the max distances between pylons and stuff. Check out all the requirements for things beforehand so you not only know how to map out your settlement, but also what junk items you need to collect.