Flat Conditions for Custom Home Building

Facebooktwitterpinterestlinkedinmail

NAHB’s analysis of Census Data from the Quarterly Starts and Completions by Purpose and Design survey indicates custom home building was effectively flat over recent quarters.

There were 49,000 total custom starts for the second quarter of 2019. This was down slightly compared to the second quarter of 2018 (50,000). Over the last four quarters, custom housing starts totaled 169,000. This was a 1.7% decline compared to the prior four quarters (172,000). Note that this definition of custom home building does not include homes intended for sale, so the analysis uses a narrow definition of the sector.

As measured on a one-year moving average, the market share of custom home building in terms of total single-family starts is now  20%, down from a cycle high of 31.5% set during the second quarter of 2009.

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. As housing production slowed in 2006 and 2007, the market share of this not-for-sale new housing increased as the number of single-family starts declined. The share increased because the credit crunch made it more difficult for builders to obtain AD&C credit, thus producing relatively greater production declines of for-sale single-family housing.

The custom building market is likely to remain relatively flat given improved availability of inventory at the higher end of the housing market.



Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: