Custom and Spec Home Market Shares in 2015

Custom home building registered declining market shares across all regions of the Unites States in 2015, except the New England and East South Central division where the custom home share of new single-family starts remained stable and relatively high. NAHB’s analysis of the most recent Census Bureau’s Survey of Construction (SOC) shows that New England registered the highest custom home market share, close to 43 percent. The East South Central division where custom home building is also common, showed the second highest market share of 39%, though a few percent down since a year ago.

Nationally, the custom home market share declined to 22% – well below the 2008-2011 levels when the credit crunch has limited builders’ access to Acquisition, Development, and Construction (AD&C) loans and shifted production towards home building on owner’s land.
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While nationally less than one in four homes started in 2015 is a custom home, the shares vary widely across the US divisions. The New England and East North Central divisions stand out for registering the highest shares of starts supervised by contractors or owners – close to 43% and 39%, respectively. The East South Central division registered the third highest share of new homes started on owners’ land – close to 35%. In the Middle Atlantic division, one in three homes started in 2015 was built on owners’ land.
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At the opposite end of the spectrum are the Western divisions – Mountain and Pacific – where less than 14% of new single-family starts were custom built homes. Home building here is dominated by spec starts. These divisions register the highest three spec home shares exceeding 83%. In comparison, in New England and the East North Central division, homes built for sale accounted for just over half of all new single-family starts, around 53%.

The West North Central division stands out for having the highest share of homes started for rent, more than 9%, and more than double the national average of 4%.
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According to the SOC definitions, homes built for sale, or spec houses, are houses built on builder’s land with the intention of selling the house and land in one transaction. Contractor-built or owner-built houses – that together make up the custom home market – are built for owner occupancy on owner’s land with either the owner or a builder acting as the general contractor.



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