Eye On Housing
NAHB’s analysis of Census Data from the Quarterly Starts and Completions by Purpose and Design survey indicates custom home building continues to experience flat conditions amidst strong demand and rising material challenges.
There were 36,000 total custom building starts during the first quarter of the year. While this marks a 22% gain from the first quarter of 2020, that comparison is affected by March 2020 declines. Over the last four quarters, custom housing starts totaled 180,000, unchanged from the prior four-quarter total.
Given the relatively 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 below 18%. This is down from a cycle high of 31.5% set during the second quarter of 2009.
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.
As always, interesting and informative data. Would you happen to know the criteria the NAHB pulls from the census to define a “custom home?” We know the general definition is newly-built on a buyer-owned plot with the involvement of a third party designer or architect, but does the NAHB include any other criteria (sale price, materials cost, etc.) in their definition?
Best regards,
Just based on tax basis (the builder does not have basis in the home) and it is done under a construction contract, rather than a sales contract.
Thanks, Robert. I appreciate your prompt reply and this info is very helpful to us.
Best,