Declines for Custom Home Building

NAHB’s analysis of Census Data from the Quarterly Starts and Completions by Purpose and Design survey indicates custom home building gained market share during recent quarters but experienced a drop for construction starts.

There were 49,000 total custom building starts during the second quarter of the year. This marks almost an 8% decline compared to the second quarter of 2022, consisting with weakness experienced throughout the home building sector. Over the last four quarters, custom housing starts totaled a solid 189,000 homes, a 7% decline compared to the prior four quarter total (204,000).

After market share declines due to a rise in spec building in the wake of the pandemic, the market share for custom homes has increased. As measured on a one-year moving average, the market share of custom home building, in terms of total single-family starts, has increased to 21%. However, this is down from a prior cycle peak 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. It represents home construction undertaken on a contract basis for which the builder does not hold tax basis in the structure during construction.

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2 thoughts on “Declines for Custom Home Building

  1. I never took into account the fact that there were 49,000 custom home construction projects in the second quarter of the year 2002. It seems like that industry is in demand since then. I wonder if it is in demand today, because it might also affect the costs of the project, and I hope that it will be affordable as well.

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