NAHB reports flat conditions for custom home building

The National Association of Home Builders analysis of Census Data from the Quarterly Starts and Completions by Purpose and Design survey indicates custom home building was effectively flat over the course of 2018.

There were 36,000 total custom starts for the fourth quarter of 2018. This was down compared to the final quarter of 2017 (40,000). Over the course of 2018, custom housing starts totaled 170,000. This was a 1.2% decline compared to 2017 (172,000). Note that this definition of custom home building does not include homes intended for sale, so the analysis uses a narrow definition of the sector.

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.

- Sponsor -

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.

Recent declines in market share are due to an acceleration in overall single-family construction, especially in spec home building. As this part of the market cools due to declining affordability, the market share for custom homes will likely stabilize.

 

Stay Updated

Get LBM industry trends, data, new products, and best practices delivered to your inbox.