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NAHB: Best Quarter for Custom Home Building in Nearly Two Years

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According to National Association of Home Builders (NAHB)’s analysis of Census Data from the Quarterly Starts and Completions by Purpose and Design survey, custom home construction is on the rise again following a brief lull.

Purchasers of custom homes are usually less susceptible to fluctuations in interest rates.

In all, 52,000 custom construction starts took place in 2024’s second quarter.

This is the strongest reading since the third quarter of 2022 and represents an approximately 6% gain over the second quarter of 2023.

Due to weakness in previous quarters, custom housing starts during the last four quarters have totaled 180,000 dwellings, a 5% decrease from the total starts over the previous four quarters (189,000).

Following share decreases due to an increase in spec building in the aftermath of the pandemic, the market share for custom homes rebounded until 2023, when it entered a phase of contraction.

According to a one-year moving average, custom home building’s market share of total single-family starts has dropped to little under 18%.

This is down from the previous cycle peak of 31.5% in the second quarter of 2009 and a 21% local peak rate at the start of 2023.

Note that this definition of custom home building excludes homes for sale, hence the analysis in this post applies a restrictive definition of the sector.

It symbolizes contract-based home construction in which the builder does not own a tax basis in the structure while it is being built.

[Read more about this topic on Eyeonhousing.org]

Jack is one of our correspondents who provide mainly on building industry trend updates.