With overall single-family construction down almost 7% for the first seven months of 2026, custom home building has been a relative bright spot for the residential construction industry. The custom building market is less sensitive to the interest rate cycle than other forms of home building but is more sensitive to changes in household wealth and stock prices. With spec home building down and the stock market up, custom building has expanded its market share in recent years. However, that expansion stalled somewhat during the second quarter.
According to NAHB’s analysis of Census data from the Quarterly Starts and Completions by Purpose and Design survey, there were 49,000 total custom building starts during the second quarter of 2026. This was 9% lower than the second quarter of 2025, which itself set a three-year high for quarterly construction volume.
For the last four quarters, custom single-family housing starts totaled 183,000 homes, effectively flat compared to the prior four quarter period (184,000).
Currently, the market share of custom home building, based on a one-year moving average, is 20% of total single-family starts. This is down from a prior cycle peak of 31.5% set during the second quarter of 2009 and the 21% recent peak rate at the beginning of 2023.
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. This form of home building is almost universally undertaken by smaller, private home builders.