Declines for Custom Home Building

NAHB’s analysis of Census Data from the Quarterly Starts and Completions by Purpose and Design survey indicates a slowing market for custom home building after a recent gain in market share.

There were 50,000 total custom building starts during the third quarter of the year. This marks an almost 17% decline compared to the third quarter of 2022, consistent with weakness experienced throughout the home building sector. Over the last four quarters, custom housing starts totaled 179,000 homes, a 14% decline compared to the prior four quarter total (208,000).

After share declines due to a rise in spec building in the wake of the pandemic, the market share for custom homes increased until recently. As measured on a one-year moving average, the market share of custom home building, in terms of total single-family starts, has fallen back to 20%. 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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One thought on “Declines for Custom Home Building

  1. The recent decline in custom home building, as highlighted in your insightful article, reflects a notable shift in the dynamics of the housing market. The statistics provided from the Quarterly Starts and Completions by Purpose and Design survey are particularly telling, indicating a significant 17% drop in custom building starts during the third quarter of this year compared to 2022.

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