Slight Rise in Owner/Contractor Built Housing

The market share of homes built on an owner’s land, with either the owner or a builder acting as the general contractor, was effectively unchanged on a quarter-over-quarter basis at the start of 2014.

NAHB’s analysis of Census Data from the Quarterly Starts and Completions by Purpose and Design survey indicates that the number of starts of this type of custom home building rose from 25,000 at the start of 2013 to 27,000 for the first quarter of 2014. This slight change marks an effectively flat market given statistical confidence intervals associated with the data.

In recent years, as the rest of the single-family construction market expanded, the market share of owner and contractor built housing has fallen significantly. As measured on a one-year moving average, the market share is now 22.8%, down from a cycle high of 31.5% set during the second quarter of 2009.

Owner_contractor built_May 14

The onset of the housing crisis and the Great Recession interrupted a 15-year long trend away from homes built on the eventual owner’s land. However, as housing production slowed in 2006 and 2007, the share of this not-for-sale new housing increased as the number of starts declined. The share increased because the credit crunch made it more difficult for builders to obtain AD&C credit and for home buyers to obtain mortgage financing, thus producing relatively greater production declines of for-sale single-family housing.



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