Custom Home Building Share Declines Slightly

According to data from the Census Bureau’s Survey of Construction (SOC), custom homes accounted for 17.6 percent of new single-family homes started—down slightly from the 17.8 percent recorded in 2020 and the lowest the annual custom home share has been since the 2005 re-design of the SOC.  The custom home market consists of contractor-built and owner-built houses—homes built one at a time for owner occupancy on the owner’s land, with either the owner or a builder acting as a general contractor. The alternatives are homes built for sale (on the builder’s land, often in subdivisions, with the intention of selling the house and land in one transaction) and homes built for rent.  In 2021, 77.0 percent of the single-family homes started were built for sale, and 5.4 percent were built for rent.

Although the custom-home percentage declined slightly in 2021, more single-family homes were started; so, the number of custom homes started in 2021 (199,683) was actually higher than the number of custom homes started in 2020 (176,499).

The quarterly published statistics show that the custom-home share of single-family starts stayed relatively flat through the second quarter of 2022. Although the quarterly statistics are more timely, they lack the geographic detail available in the annual data set.

When analyzed by the 9 census divisions, the annual data show that the highest custom home share in 2021 was 40.1 percent New England Division. In the South Atlantic Division, on the other hand, the share was only 11.5 percent. In the East South-Central Division, 38.8 percent of new homes started were contractor-built or owner-built houses, followed by the East North-Central Division at 32.8 percent and 31.5 percent in the Middle Atlantic Division. In the West North Central Division 20.3 percent of new homes started where custom homes, followed by 15.0 percent in the West South-Central Division, 14.7 percent in the Pacific Division, and 12.9 percent in the  Mountain Division.