NAHB’s analysis of Census Data from the Quarterly Starts and Completions by Purpose and Design survey indicates custom home building ended the year 2020 flat due second quarter weakness.
There were 44,000 total custom building starts during the fourth quarter of the year, equal to the fourth quarter 2019 total. Over the last four quarters, custom housing starts totaled 176,000, roughly unchanged from the 2019 total of 177,000.
Given the unchanged level of custom volume in a year with overall home building gains, the market share for custom home building declined. As measured on a one-year moving average, the market share of custom home building, in terms of total single-family starts, declined to 18%. This is down from a cycle high of 31.5% set during the second quarter of 2009. Nonetheless, more custom builds are likely to occur in low-density markets as home demand shifts in the near-term.
Note that this definition of custom home building does not include homes intended for sale, so the analysis in this post uses a narrow definition of the sector.