Recent NAHB data analysis from Census Data from the Quarterly Starts and Completions by Purpose and Design survey shows custom home building remains flat. For the second quarter of 2018, there were 50,000 total custom starts, which is unchanged compared to the same time period last year. Over the last four quarters, custom housing starts totaled 172,000, a 0.6% gain over the prior four quarters.
As measured on a one-year moving average, the market share of custom home building in terms of total single-family starts is now 19%, down from a cycle high of 31.5% set during the second quarter of 2009.
The onset of the housing crisis and the Great Recession interrupted a 15-year long trend away from homes built on the eventual owner’s land. As housing production slowed in 2006 and 2007, the market share of this not-for-sale new housing increased as the number of single-family starts declined. The share increased because the credit crunch made it more difficult for builders to obtain AD&C credit, thus producing relatively greater production declines of for-sale single-family housing.
The market share for custom home building will likely experience ups and downs in the quarters ahead as the overall single-family construction market expands. Recent declines in market share are due to an acceleration in overall single-family construction, especially in spec home building.
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