The market share of homes built on an owner’s land, with either the owner or a builder acting as the general contractor, fell on a year-over-year basis as the rest of the single-family market recovers.

Census Data from the Quarterly Starts and Completions by Purpose and Design survey indicate that the number of starts of this particular type of custom home building was almost unchanged from the second quarter of 2012 (37,000 starts) to the second quarter of 2013 (38,000 starts).

However, 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 1-year moving average, the market share has fallen to 21.8%, down from a cycle high of 31.5% set during the second quarter of 2009. In fact, the 1-year moving average has now fallen for five consecutive quarters.

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 even 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.

Tags: custom homebuilding, economics, home building, housing